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- W2274196875 abstract "In most OECD countries dial up internet accounts have typically been offered under two-part tariffs where and are charged separately. By contrast broadband accounts are typically offered under flat-rate tariffs. As consumers purchase internet accounts based upon their combined valuations of each of the and components it would be expected that different broadband tariff structures would result in different rates of broadband diffusion. As broadband is the successor to dial-up internet technology the diffusion rate will also depend upon the dial-up tariff structure. Using theories of two-part tariffs bundling and price discrimination this paper examines the effect of both dial-up and broadband tariff structures on broadband diffusion. Specifically flat-rate broadband tariffs slow the rate of diffusion relative to an optimal two-part tariff. Flat-rate tariffs prevail as a strategic means of extracting rents from early adopters with high values but low valuations. Flat-rate dial-up tariffs slow the rate of substitution to broadband via two mechanisms: a larger connection gift from bundling with voice telephony and a larger usage gift from beyond the point of marginal cost. Relative to an optimal two-part dial-up tariff the marginal substituter from flat-rate dial-up to broadband has both a higher valuation and a larger volume. Conversely two-part dial-up tariffs where subsidises result in earlier substitution to broadband as both the valuation and volumes are lower." @default.
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- W2274196875 date "2008-03-09" @default.
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- W2274196875 title "The Role of Price Structure in Telecommunications Technology Diffusion" @default.
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