Home > Archives > Additional Archives > Hal Varian   Hal Varian Professor of Economics at UC Berkeley Dean of the School of Information and Management Systems UC-Berkeley hal@sims.berkeley.edu Estimating the Demand for Bandwidth   One experiment in the INDEX Project offered users different bandwidths for different prices. We use the data from this experiment to estimate the demand for bandwidth and the value of waiting time for users. The parameter estimates for the demand functions for bandwidth are plausible and well-behaved. The parameter estimates for the value of time are, on average, very low, but there are some subjects with relatively high time values. The INDEX Project is an experiment designed to estimate how much people are willing to pay for various kinds of Internet Quality of Service (QoS). We have architected the system so as to provide different QoS's on demand and record the usage of each different QoS by each user. Users can change their requested QoS instantaneously and are billed monthly for their usage. Since April 1998 we have been providing approximately 70 users at UC Berkeley with residential ISDN service through the INDEX Project. Edell and Variaya (1999) provides an overview of the project. Current information and other reports can be found on the INDEX project Web page. In this paper we examine one set of INDEX experiments designed to measure the willingness to pay for bandwidth. In these experiments users were offered the choice of 6 different bandwidths, ranging from 8 Kbs to 128 Kbs. Users could choose 8 Kbs service for free at any time. Each Sunday a new set of prices were chosen for the other bandwidths, ranging from .1 cents to 12 cents per minute of use. A short pdf version of the paper is at http://www.sims.berkeley/~hal/Papers/wtp/wtp.pdf
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