Demand for different qualities of service for Internet access: a review ofINDEX findings

The Internet Demand Experiment (INDEX) is a market experiment to measure de mand for Inter net;access as a function of Quality of Service (QoS), pricin g scheme and application. INDEX subjects choose their desired network servi ces from a menu of QoS-price offerings, which currently consists of differe nt bandwidth-price choices, and they pay for their usage of the network ser vices. The approximately 70 subjects currently in the experiment include fa culty, staff and students of the University of California, Berkeley. This paper describes the objectives and experimental design and summarizes the findings to date from the first four experiments conducted under the IN DEX project. This paper also characterizes the INDEX subject pool using dem ographic data collected. Overall, the INDEX findings indicate that usage is responsive to price signals, although the degree of responsiveness varies widely across users. The INDEX findings also show that the INDEX subject po ol is heterogeneous in many respects, including individual-specific valuati ons of time and convenience. In addition, we conclude that users prefer a p ricing scheme in which they pay a flat-rate for basic service and have acce ss to higher bandwidths that they can use on demand. We also find that when usage is free of marginal usage charges, users tend to transmit significan tly greater volume than when usage is priced at the margin, which lends fur ther support to the implementation of the suggested pricing scheme.