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Why Should Governments Support Broadband Adoption?

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Author Info
Kolko, Jed

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Abstract

Governments justify support of Internet diffusion on two grounds: (1) to overcome a persistent digital divide in broadband availability and (2) to facilitate online activities that are socially or economically desirable. This paper assesses both these claims. Using individual-level data from Forrester Research, the analysis finds significantly lower residential broadband adoption in lower-income and lower-density zip codes, controlling for individual characteristics. Further tests show that lower adoption in these areas is evidence of a persistent digital divide in availability. The analysis then assesses how broadband adoption changes individuals’ usage of online activities. Broadband adoption increases individuals’ frequency of researching health information online, but there is no evidence that broadband adoption increases usage of online job sites or online government services. Localities currently considering municipal wireless (Wi-Fi) initiatives should focus on digital divide justifications rather than expecting to raise usage of a wide range of online activities perceived to be socially desirable.

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File URL: http://mpra.ub.uni-muenchen.de/3363/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3363.

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Date of creation: Nov 2006
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Handle: RePEc:pra:mprapa:3363

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Related research
Keywords: broadband; Internet; digital divide; online; consumer behavior;

Other versions of this item:

Find related papers by JEL classification:
L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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References listed on IDEAS
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  1. Clay, Karen, et al, 2002. "Retail Strategies on the Web: Price and Non-price Competition in the Online Book Industry," Journal of Industrial Economics, Blackwell Publishing, vol. 50(3), pages 351-67, September. [Downloadable!] (restricted)
  2. Thomas Downes & Shane Greenstein, 2006. "Understanding Why Universal Service Obligations May Be Unnecessary: The Private Development of Local Internet Access Markets," Discussion Papers Series, Department of Economics, Tufts University 0615, Department of Economics, Tufts University. [Downloadable!]
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  3. Peter Kuhn & Mikal Skuterud, 2004. "Internet Job Search and Unemployment Durations," American Economic Review, American Economic Association, vol. 94(1), pages 218-232, March. [Downloadable!]
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  4. Austan Goolsbee, 2000. "In A World Without Borders: The Impact Of Taxes On Internet Commerce," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 561-576, May. [Downloadable!] (restricted)
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  5. Jeffrey R. Brown & Austan Goolsbee, 2002. "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 481-507, June. [Downloadable!] (restricted)
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  6. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law & Economics, University of Chicago Press, vol. 45(2), pages 317-43, October.
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  7. Morton, Fiona Scott & Zettelmeyer, Florian & Silva-Risso, Jorge, 2001. "Internet Car Retailing," Journal of Industrial Economics, Blackwell Publishing, vol. 49(4), pages 501-19, December. [Downloadable!] (restricted)
  8. Grubesic, Tony H., 2006. "A spatial taxonomy of broadband regions in the United States," Information Economics and Policy, Elsevier, vol. 18(4), pages 423-448, November. [Downloadable!] (restricted)
  9. Downes, Tom & Greenstein, Shane, 2002. "Universal access and local internet markets in the US," Research Policy, Elsevier, vol. 31(7), pages 1035-1052, September. [Downloadable!] (restricted)
  10. James E. Prieger, 2003. "The Supply Side of the Digital Divide: Is There Equal Availability in the Broadband Internet Access Market?," Economic Inquiry, Oxford University Press, vol. 41(2), pages 346-363, April. [Downloadable!] (restricted)
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