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The cost of switching Internet providers in the French broadband industry, or why ADSL has diffused faster than other innovative technologies

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  • Jackie Krafft

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique)

  • Evens Salies

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

The paper focuses on the innovative French broadband Internet industry that is characterised by inertia phenomena in terms of technology choice. We argue that although inertia on the supply side helps to explain the faster diffusion of ADSL, a more complete picture can be obtained when we consider the existence of costs faced by customers when switching between Internet Service Providers (ISPs). We calculate these so-called "switching costs" and conclude that they act as a barrier to customers' mobility, thus bringing about a dominance of the technology supplied by the largest firm.

Suggested Citation

  • Jackie Krafft & Evens Salies, 2006. "The cost of switching Internet providers in the French broadband industry, or why ADSL has diffused faster than other innovative technologies," SciencePo Working papers Main hal-00972799, HAL.
    • Handle: RePEc:hal:spmain:hal-00972799
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-00972799
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jackie Krafft & Evens Salies, 2008. "Why and how should innovative industries with high consumer switching costs be re-regulated?," Documents de Travail de l'OFCE 2008-04, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Evens Salies, 2012. "Asymmetric switching costs can improve the predictive power of shy's model," SciencePo Working papers Main hal-01070341, HAL.
    3. Antonelli, Cristiano & Krafft, Jackie & Quatraro, Francesco, 2010. "Recombinant knowledge and growth: The case of ICTs," Structural Change and Economic Dynamics, Elsevier, vol. 21(1), pages 50-69, March.
    4. Salies, Evens, 2005. "A Measure of Switching Costs in the GB Electricity Retail Market," MPRA Paper 28255, University Library of Munich, Germany, revised Apr 2007.
    5. repec:hal:spmain:info:hdl:2441/53r60a8s3kup1vc9ji1hni539 is not listed on IDEAS
    6. Jackie Krafft & Francesco Quatraro & Pier-Paolo Saviotti, 2008. "Evolution of the knowledge base in knowledge intensive sectors," Working Papers hal-00264261, HAL.
    7. László Lörincz & Péter Nagy, 2010. "Switching Costs in Telecommunications: Conclusions from a Hungarian Survey," Chapters, in: Morten Falch & Jan Markendahl (ed.), Promoting New Telecom Infrastructures, chapter 11, Edward Elgar Publishing.
    8. repec:hal:spmain:info:hdl:2441/6143 is not listed on IDEAS

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    More about this item

    Keywords

    consumers' switching costs; technological inertia; evolution of industries;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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