Microeconomics - Coursework Example

It has brought drastic change not only in the mode of business activities, but also communication. It has changed every aspect of human life from studying, working to shopping and socializing. Therefore Internet services have proliferated in every part of this world and its demand is growing every day. Internet services supply in rural areas In this era of the Internet, it has become obvious that sound knowledge of Internet services can lead to success in business, education, research and other avenues.

Therefore the demand of the Internet has become high even in rural areas and in every domestic household. The availability of Broadband (high-speed) services has brought revolutionary changes in the demand of Internet services. It is important that the supply of Internet remains equal in all areas. Prieger (2003) has surveyed and concluded that the supply of broadband services is not equal in all areas and there is low availability of the services in rural areas inhabited by poor and minority communities.

The other result of this survey is that low supply of Internet in rural areas is due to the low demand in these areas because of market size and low knowledge of computers. A study has construed that broadband services will be unavailable in almost 12 percent of U.S. households because of lack of demand whose one contributory factor is the cost of Internet services (Prieger, 2003, p.347). . The key factor here is the cost of providing Internet broadband services. In urban areas, due to improved infrastructure and more usage of phone services than rural areas, the supply cost of broadband is low.

This makes it convenient for service providers to supply Internet services in rural areas; hence household income is not the considerable factor here (Prieger, 2003, p.359). Moreover, in a developed country like UK, the rural population being considerably lower than urban population, the former does not guarantee high return on investments that need to be made on creating a next-generation broadband. Therefore, it is estimated that almost 33 percent of UK homes will not be supplied with fast broadband services from big internet providers without financial backing from the government.

As recently in 2011, there has been an allocation of ? 363 m to develop the broadband services in rural areas of England and Scotland. This is however not considered as sufficient amount to bridge the supply gap between domestic broadband users and non-users. For instance, Berkshire which has been allocated ? 1.4 m is not likely to receive supply of fast broadband services because it consists of only 8 percent domestic users (Rural Broadband funding ready for England and Scotland, 2011). Household demand of Internet broadband service In America, as part of FCC (Federal Communications Commission), Rosston et al. (2010) have conducted a survey in 2009-2010 to determine the level of household consumer demand of different aspects of the Internet broadband service.

A major consideration during this survey was consumers’ eagerness to pay for improved services of eight features of Internet service.