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The Diffusion of Fixed Broadband: An Empirical Analysis

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Abstract

Broadband infrastructure is a key component of the knowledge economy. Broadband connections on both fixed and mobile networks are becoming an indicator of the knowledge economy. Employing the largest secondary data set, this study examines adoption factors of fixed broadband. The result of nonlinear and linear regression analysis of fixed broadband deployment suggests local loop unbundling (LLU) policy, platform completion between different broadband technologies and other diverse industry, ICT (Information and Communication Technology) and demographic factors influence fixed broadband diffusion. Specifically, the regression analysis of fixed broadband penetration found different types of LLU policies and previous fixed broadband penetration are significant factors of fixed broadband deployment. Some of the significant factors of fixed broadband deployment are different in developed countries than developing countries. This finding suggests, countries fostering broadband deployment need to adopt LLU policy for broadband, but the costs and benefits of the different LLU policy types should be carefully considered. Interestingly, the result of nonlinear regressions of fixed-broadband penetration suggest high levels of platform competition are related to high levels of fixed-broadband penetration, but the effects of platform competition are not statistically significant in OECD countries. This outcome is consistent with the result of linear regression analysis of developed countries (high income ITU membership countries). Considering OECD countries are composed of 30 developed countries with comparatively high GDP per capita, this result is robust. Taking into account this study’s results as well as previous empirical studies on fixed broadband deployment, the effects of platform competition are strong in the initial deployment of fixed-broadband, but the effects of platform competition are decreasing when the broadband market size is sufficiently large or the broadband market is mature. Also, as expected, previous fixed- broadband penetration was found to be an influential factor of current fixed-broadband deployment in all ITU membership countries, whether characterized as developed or developing countries. Considering impacts of platform competition in ITU membership countries, currently it appears in many countries that network effects and the effects of platform competition co-exist.

Suggested Citation

  • Sangwon Lee & Justin S. Brown, 2008. "The Diffusion of Fixed Broadband: An Empirical Analysis," Working Papers 08-19, NET Institute, revised Sep 2008.
    • Handle: RePEc:net:wpaper:0819
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    File URL: http://www.netinst.org/Lee_Brown_08-19.pdf
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    Cited by:

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    3. Dauvin, Magali & Grzybowski, Lukasz, 2014. "Estimating broadband diffusion in the EU using NUTS 1 regional data," Telecommunications Policy, Elsevier, vol. 38(1), pages 96-104.
    4. Shinohara, S. & Akematsu, Y. & Tsuji, M., 2011. "Panel data analysis of factors of broadband services diffusion in OECD countries: Focus on deployment and migration," 22nd European Regional ITS Conference, Budapest 2011: Innovative ICT Applications - Emerging Regulatory, Economic and Policy Issues 52157, International Telecommunications Society (ITS).
    5. Marianna Belloc & Paolo Guerrieri, 2015. "Impact of ICT diffusion and adoption on sectoral industrial performance: evidence from a panel of European countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(1), pages 67-84, April.

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    More about this item

    Keywords

    Broadband diffusion; fixed broadband; platform competition; network effect;
    All these keywords.

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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