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Why Should Governments Support Broadband Adoption?

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  • Jed Kolko

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 of these arguments. 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.

Suggested Citation

  • Jed Kolko, 2007. "Why Should Governments Support Broadband Adoption?," PPIC Working Papers 2007.01, Public Policy Institute of California.
    • Handle: RePEc:ppi:ppicwp:2007.01
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    References listed on IDEAS

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    1. Karen Clay & Ramayya Krishnan & Eric Wolff & Danny Fernandes, 2002. "Retail Strategies on the Web: Price and Non–price Competition in the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 351-367, September.
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    More about this item

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • 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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