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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

  • Evens Salies

    (OFCE)

  • Jackie Krafft

    (Groupe de Recherche en Droit, Economie et Gestion)

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.

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File URL: http://spire.sciencespo.fr/hdl:/2441/962/resources/der-2006-krafftsalies-ofce16.pdf
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Paper provided by Sciences Po in its series Sciences Po publications with number n°2006-16.

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Date of creation: Oct 2006
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Handle: RePEc:spo:wpmain:info:hdl:2441/962
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