eason for such a low willingness to pay is that the experiment was conducted in 1998-99, when most Internet users had little need for high-speed connec- tions. This was before the MP3 craze and before widespread videostream- ing developed. More recently, in examining the nature of Internet use by U.S. broad- band and narrowband subscribers, Paul Rappoport and his colleagues found that the average broadband user is on the Internet 50 percent more than the average narrowband user. However, use among both groups is highly skewed, as is use of most communications media. Significantly, broadband users had more "visits" of Internet sites and were connected to those sites for shorter times-presumably because their connections were much faster- but the differences in the types of sites visited were not great. At this juncture, no one knows how the demand for or use of broadband will unfold as new Internet applications are developed. At the same time, evidence from the United States suggests that the price elasticity of demand for broadband connections is fairly high. Rappoport and his colleagues found that the price elasticity of demand for DSL service is - -1.46. 19 Using more recent data for households with access to both DSL and cable modem service in the United States, J. Gregory Sidak and I estimated that the price elasticities of demand for both cable modem service and DSL are equal to -1.2 and that the cross-price elasticities are positive. 20 These results sistent with the observation that households still do not consider broad- band a necessity. However, the limited evidence suggests that demand elas- ticities may be falling as U.S. broadband penetration approaches 25 percent of all households. 21 Regulation of Broadband in the United States Current discussions of U.S. public policy on broadband center on two issues: the need to regulate incumbent telephone companies that have al- leged "bottleneck" monopolies and the effect of such regulation on these incumbents' willingness to undertake risky investments in br