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Next Generation Access and Digital Divide: Opposite Sides of the Same Coin?

  • Dolente, Cosimo
  • Galea, John Joseph
  • Leporelli, Claudio
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    Geographical averaging of retail and wholesale prices could distort incentives for bypass entry in both the metropolitan and the high-cost areas. The two-instrument approach to universal service support, proposed in (Armstrong, 2001), could enhance efficiency, through competitive and technological neutrality. Alternatively, the industry support to high cost areas could be substituted by redistributive fiscal measures or public subsidies. Using evidence from Italy we suggest that tackling demographic, educational, and income inequalities is necessary, even in low cost areas, to support further broadband penetration. We estimate logistic regressions of Internet and broadband use at home, and show that a substantial increase of broadband penetration is possible in Italy only if specific platforms and applications are made available to older and less educated households. Therefore, a critical mass of services could help reaching the critical mass of users that make Next Generation Access Networks viable.

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    Paper provided by International Telecommunications Society (ITS) in its series 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation with number 9.

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    Date of creation: 2010
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    Handle: RePEc:zbw:itse10:9
    Contact details of provider: Web page: http://www.itseurope.org/

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    1. Savage, Scott James & Waldman, Donald M., 2009. "Ability, location and household demand for Internet bandwidth," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 166-174, March.
    2. Mark Armstrong, 2001. "Access Pricing, Bypass, and Universal Service," American Economic Review, American Economic Association, vol. 91(2), pages 297-301, May.
    3. Gasmi, F. & Laffont, J. J. & Sharkey, W. W., 2000. "Competition, universal service and telecommunications policy in developing countries," Information Economics and Policy, Elsevier, vol. 12(3), pages 221-248, September.
    4. Castelli, Francesco & Leporelli, Claudio, 1993. "Critical mass of users versus critical mass of services in a multiproduct information service system," Information Economics and Policy, Elsevier, vol. 5(4), pages 331-355, December.
    5. Valletti, Tommaso M & Hoernig, Steffen & Barros, Pedro P, 2002. "Universal Service and Entry: The Role of Uniform Pricing and Coverage Constraints," Journal of Regulatory Economics, Springer, vol. 21(2), pages 169-90, March.
    6. H. Cremer & F. Gasmi & A. Grimaud & J. J. Laffont, 2001. "Universal Service: An economic perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 72(1), pages 5-43, 03.
    7. Hauge, Janice A. & Chiang, Eric P. & Jamison, Mark A., 0. "Whose call is it? Targeting universal service programs to low-income households' telecommunications preferences," Telecommunications Policy, Elsevier, vol. 33(3-4), pages 129-145, April.
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