Broadband Leadership in Emerging Markets

Extensive broadband use has largely occurred to date in developed economies. However, there are a growing number of emerging markets, including Bulgaria, China, Malaysia, Mexico, Romania and South Africa as well as a number of Caribbean island nations, where mobile or fixed broadband or both have achieved moderately high penetration levels. The paper addresses the prospects of broadband development in emerging markets, defined as countries with GDP per capita between $2500 and $10,000. In the process it focuses on the following issues: (1) what factors best explain the leadership position of emerging markets with the highest fixed and mobile broadband penetration levels; and (2) how do we better understand the relationships between supply- and demand-side drivers of broadband adoption and use in emerging markets? The paper finds that emerging markets with broadband leadership positions do not reflect the highest GDP per capita levels (within the $2500 - $10,000 range), which suggests that income plays less of a role in its adoption than is the case with mobile phones. At the same time, other factors appear to play an important role in determining why some emerging countries have been able to achieve high rates of broadband adoption and use. These factors include demand - side endowments (education, household size), geography (size of territory, population density, proximity to earlier - stage broadband leaders), housing stock, legacy infrastructure, income distribution, the presence - or absence - of cable TV operators, and regulatory and licensing policies. The paper also identifies three different models of broadband development - namely, dual-mode leadership (fixed and mobile), single-mode mobile leadership, and single-mode fixed leadership. To date these models have generally been associated with different subsets of the above - mentioned factors and have largely prevailed in different regions of the world. The main examples of the dual-mode model stem from Eastern Europe and parts of Latin America, the mobile-only or mobile-dominated model is common to the African and Asian leaders, and the fixed-only model is represented by several Caribbean nations.