IDEAS home Printed from https://ideas.repec.org/p/vuw/vuwcsr/18994.html
   My bibliography  Save this paper

Broadband Diffusion: Lags from Vintage Capital, Learning by Doing, Information Barriers and Network Effects

Author

Listed:
  • Howell, Bronwyn
  • Obren, Mark

Abstract

This paper examines the factors that affect the uptake of broadband in the residential and SME markets. We searched the economics literature on diffusion theory and identified five different models that potentially provide insights into the broadband phenomenon. These models were applied to the New Zealand market using detailed product and market data from an index ISP and the major telecommunications network provider which we consider representative of the market as a whole.We find evidence to suggest that the adoption of ADSL the dominant broadband technology in New Zealand is driven differently in the residential and SME markets. SMEs pay a fixed fee for each telephone circuit plus a toll tariff for all calls including local calls. An SME with multiple computers accessing the Internet requiring multiple telephone lines or with a reasonable level of traffic generating toll charges can cost-justify prematurely retiringmodem capital and introducing ADSL as there are immediate cost benefits. However an SME with little traffic and only one telephone line may still find that dial-up modems provide adequate service at a lower price.

Suggested Citation

  • Howell, Bronwyn & Obren, Mark, 2002. "Broadband Diffusion: Lags from Vintage Capital, Learning by Doing, Information Barriers and Network Effects," Working Paper Series 18994, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:18994
    as

    Download full text from publisher

    File URL: https://ir.wgtn.ac.nz/handle/123456789/18994
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    3. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    4. Jovanovic, Boyan & MacDonald, Glenn M, 1994. "Competitive Diffusion," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 24-52, February.
    5. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
    6. Zysman, John & Weber, Steven, 2001. "Governance and Politics of the Internet Economy--Historical Transformation or Ordinary Politics with a New Vocabulary?," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt7zx3g1qn, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    7. Quah, Danny, 2002. "Technology Dissemination and Economic Growth: Some Lessons for the New Economy," CEPR Discussion Papers 3207, C.E.P.R. Discussion Papers.
    8. Boyan Jovanovic & Peter L. Rousseau, 2000. "Vintage organization capital," Proceedings, Federal Reserve Bank of San Francisco, issue Apr.
    9. Quah, Danny, 2002. "Technology dissemination and economic growth: some lessons for the new economy," LSE Research Online Documents on Economics 2118, London School of Economics and Political Science, LSE Library.
    10. Jeremy Greenwood & Boyan Jovanovic, 2001. "Accounting for Growth," NBER Chapters, in: New Developments in Productivity Analysis, pages 179-224, National Bureau of Economic Research, Inc.
    11. Jason G. Cummins & Giovanni L. Violante, 2002. "Investment-Specific Technical Change in the US (1947-2000): Measurement and Macroeconomic Consequences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 243-284, April.
    12. Andrew Atkeson & Patrick J. Kehoe, 2002. "Measuring Organization Capital," NBER Working Papers 8722, National Bureau of Economic Research, Inc.
    13. Boyan Jovanovic, 1998. "Vintage Capital and Inequality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 497-530, April.
    14. Andrew Atkeson & Patrick J. Kehoe, 2002. "The transition to a new economy after the Second Industrial Revolution," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    15. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
    16. S. J. Liebowitz & Stephen E. Margolis, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-150, Spring.
    17. Danny Quah, 2002. "Technology Dissemination and Economic Growth: Some Lessons for the New Economy," CEP Discussion Papers dp0522, Centre for Economic Performance, LSE.
    18. Elhanan Helpman & Manuel Trajtenberg, 1996. "Diffusion of General Purpose Technologies," NBER Working Papers 5773, National Bureau of Economic Research, Inc.
    19. Enright, Christina, 2000. "Strategic Behaviour of Internet Service Providers in New Zealand and the Performance of this Market," Working Paper Series 3914, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    20. Andrew Atkeson & Patrick Kehoe, 1997. "Industry Evolution and Transition: A Neoclassical Benchmark," NBER Working Papers 6005, National Bureau of Economic Research, Inc.
    21. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:vuw:vuwscr:18994 is not listed on IDEAS
    2. Howell, Bronwyn & Obren, Mark, 2002. "Broadband Diffusion: Lags from Vintage Capital, Learning by Doing, Information Barriers and Network Effects," Working Paper Series 3896, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    3. Bronwyn HOWELL & Arthur GRIMES, 2010. "Productivity Questions for Public Sector Fast Fibre Network Financiers," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(78), pages 127-146, 2nd quart.
    4. Jonathan Temple, 2002. "The Assessment: The New Economy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 241-264.
    5. Ajoy Ketan Sarangi & Rudra Prakash Pradhan, 2020. "ICT infrastructure and economic growth: a critical assessment and some policy implications," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 47(4), pages 363-383, December.
    6. Erich Gundlach, 2005. "Solow vs. Solow: Notes on Identification and Interpretation in the Empirics of Growth and Development," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(3), pages 541-556, October.
    7. Evangelia Vourvachaki, 2005. "Information and Communication Technologies in a Multi-Sector Endogenous Growth Model," Money Macro and Finance (MMF) Research Group Conference 2005 10, Money Macro and Finance Research Group.
    8. Sang-Yong Tom Lee & Xiao Jia Guo, 2004. "Information and Communications Technology (ICT) and Spillover: A Panel Analysis," Econometric Society 2004 Far Eastern Meetings 722, Econometric Society.
    9. Ralph Hippe & Roger Fouquet, 2015. "The human capital transition and the role of policy," GRI Working Papers 185, Grantham Research Institute on Climate Change and the Environment.
    10. Matti Pohjola, 2002. "The New Economy in Growth and Development," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 380-396.
    11. Henry van der Wiel, 2001. "Does ICT boost Dutch productivity growth?," CPB Document 16.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Hung, Juann & Salomon, Matt & Sowerby, Stacia, 2004. "International trade and US productivity," Research in International Business and Finance, Elsevier, vol. 18(1), pages 1-25, April.
    13. John G. Fernald, 2015. "Productivity and Potential Output before, during, and after the Great Recession," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 1-51.
    14. Raéf Bahrini & Alaa A. Qaffas, 2019. "Impact of Information and Communication Technology on Economic Growth: Evidence from Developing Countries," Economies, MDPI, vol. 7(1), pages 1-13, March.
    15. Claudio, MATTALIA, 2005. "Human Capital Accumulation in R&D-based Growth Models," Discussion Papers (ECON - Département des Sciences Economiques) 2005046, Université catholique de Louvain, Département des Sciences Economiques.
    16. Carol Corrado & Charles Hulten & Daniel Sichel, 2009. "Intangible Capital And U.S. Economic Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 661-685, September.
    17. Gros, Daniel & Alcidi, Cinzia, 2014. "The Global Economy in 2030: Trends and Strategies for Europe," CEPS Papers 9142, Centre for European Policy Studies.
    18. Mark Lijesen, 2002. "End user prices in liberalised energy markets," CPB Discussion Paper 16.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    19. Kenneth Carlaw & Les Oxley & Paul Walker & David Thorns & Michael Nuth, 2006. "Beyond The Hype: Intellectual Property And The Knowledge Society/Knowledge Economy," Journal of Economic Surveys, Wiley Blackwell, vol. 20(4), pages 633-690, September.
    20. Jovanovic, Boyan & Rousseau, Peter L., 2005. "General Purpose Technologies," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 18, pages 1181-1224, Elsevier.
    21. Kumar, Ronald Ravinesh & Stauvermann, Peter Josef & Samitas, Aristeidis, 2016. "The effects of ICT⁎ on output per worker: A study of the Chinese economy," Telecommunications Policy, Elsevier, vol. 40(2), pages 102-115.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vuw:vuwcsr:18994. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Library Technology Services (email available below). General contact details of provider: https://edirc.repec.org/data/fcvuwnz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.