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Platform Competition and Broadband Uptake: Theory and Empirical Evidence from the European Union

Author

Listed:
  • Walter Distaso

    (University of Exeter)

  • Paolo Lupi

    (Autorità per le Garanzie nelle Comunicazioni)

Abstract

Broadband access provides users with high speed, always-on connectivity to the Internet. Due to its superiority, broadband is seen as the way for consumers and firms to exploit the great potentials of new applications. This has generated a policy debate on how to stimulate adoption of broadband technology. One of the most disputed issues is about competition policies: these may be intended to promote competition in the Digital Subscriber Line (DSL) segment of the market (intra- platform competition), or to stimulate entry into the market for alternative platforms such as cable access or fiber optics (inter- platform competition). Using a model of oligopoly competition between differentiated products, our paper explicitly studies the effect of inter and intra platform competition on the diffusion of broadband access. The implications of the model are then tested using data from 14 European countries. The econometric evidence confirms the results of the theoretical model and indicates that while inter-platform competition drives broadband adoption, competition in the market for DSL services does not play a significant role. The results also confirm that lower unbundling prices stimulate broadband uptake.

Suggested Citation

  • Walter Distaso & Paolo Lupi, 2004. "Platform Competition and Broadband Uptake: Theory and Empirical Evidence from the European Union," Industrial Organization 0410001, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpio:0410001
    Note: Type of Document - pdf; pages: 22
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0410/0410001.pdf
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    References listed on IDEAS

    as
    1. Oecd, 2001. "The Development of Broadband Access in the OECD Countries," OECD Digital Economy Papers 56, OECD Publishing.
    2. Oecd, 2003. "Broadband Driving Growth: Policy Responses," OECD Digital Economy Papers 75, OECD Publishing.
    3. Jerry A. Hausman & J. Gregory Sidak & HalJ. Singer, 2001. "Cable Modems and DSL: Broadband Internet Access for Residential Customers," American Economic Review, American Economic Association, vol. 91(2), pages 302-307, May.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. repec:oup:jcomle:v:3:y:2007:i:2:p:243-279. is not listed on IDEAS
    2. repec:ces:ifodic:v:4:y:2006:i:3:p:14567467 is not listed on IDEAS
    3. Paul de Bijl & Martin Peitz, 2006. "Broadband Access in Europe: Challenges for Policy and Regulation," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 4(3), pages 10-15, October.

    More about this item

    Keywords

    Broadband; inter-platform and intra-platform competition; local loop unbundling;

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L99 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Other

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