Estimating broadband diffusion in the EU using NUTS 1 regional data

In this paper we use panel data on NUTS 1 regional data for 27 EU countries in the years 2006–2010 to analyze determinants of broadband diffusion. We estimate both linear demand specification and the logistic diffusion function. We find that, after controlling for regional differences due to socioeconomic factors, inter-platform competition approximated by an inter-platform Herfindahl index has a significant positive impact on broadband diffusion. Broadband deployment is lower in countries in which DSL has a greater share in Internet access and it is higher in countries in which cable modem has a greater share in Internet access. Moreover, we find that competition between DSL providers has a significant and positive impact on broadband penetration. First, higher prices for a fully unbundled local loop connection, which represent the cost of providing copper-based Internet services, have a significant and negative impact on broadband penetration. Second, a greater incumbent share in DSL connections has a significant and negative impact on broadband penetration.     

The Internet of Things as an accelerator of advancement of broadband networks: A case of Thailand

The advanced development of broadband access is an inevitable step toward supportive daily lives and sustainable economic growth. However, the decisive outcome of the development relies heavily on the demand side. Consumer choice among advanced Internet broadband technologies will determine the achievement of the development. This study aims to illustrate that consumer decisions on choices of advanced Internet access are influenced by the emergence of the Internet of Things (IoT) applications. A bivariate probit model is applied to examine the effects of IoT, consumer's individual characteristics, and their current use of networks on their decision pertaining to the choice of advanced Internet access. Using Thailand as a case study, the result indicates that the emergence of IoT applications accelerates the adoption of both advanced mobile broadband (5G) and advanced fixed broadband (FTTH). This finding may help policy makers to optimize the future direction of the Internet infrastructure development in Thailand, and also countries in a similar stage.     

The impact on broadband access to the Internet of the dual ownership of telephone and cable networks

In Portugal, until recently, the telecommunications incumbent offered broadband access to the Internet, both through digital subscriber line and cable modem. We estimate the impact on broadband access to the Internet of the structural separation of these two businesses. Using a panel of consumer level data and a random effects mixed logit model, we estimate the price elasticities of demand and the marginal costs of broadband access to the Internet. Based on these estimates, we simulate the effect of structural separation on prices and social welfare. Our estimates indicate that structural separation would cause a substantial welfare increase. These results raise questions about the policy of some countries of allowing the dual ownership of telephone and cable networks.     

A two-sided model of paid peering

Internet users have suffered collateral damage in tussles over paid peering between large ISPs and large content providers. Paid peering is a relationship where two networks exchange traffic with payment, which provides direct access to each other’s customers without having to pay a third party to carry that traffic for them. The issue will arise again when the United States Federal Communications Commission (FCC) considers a new net neutrality order.We first consider the effect of paid peering on broadband prices. We adopt a two-sided market model in which an ISP maximizes profit by setting broadband prices and a paid peering price. We analytically derive the profit-maximizing prices, and show that they satisfy a generalization of the well-known Lerner rule. Our result shows that paid peering fees reduce the premium plan price, increase the video streaming price and the total price for premium tier customers who subscribe to video streaming services; however, the ISP passes on to its customers only a portion of the revenue from paid peering. ISP profit increases but video streaming profit decreases as an ISP moves from settlement-free peering to paid peering price.We next consider the effect of paid peering on consumer surplus. We find that consumer surplus is a uni-modal function of the paid peering fee. The paid peering fee that maximizes consumer surplus depends on elasticities of demand for broadband and for video streaming. However, consumer surplus is maximized when paid peering fees are significantly lower than those that maximize ISP profit. However, it does not follow that settlement-free peering is always the policy that maximizes consumer surplus. The peering price depends critically on the incremental ISP cost per video streaming subscriber; at different costs, it can be negative, zero, or positive.     

Fixed-to-mobile substitution in the European Union

This paper analyzes substitution between access to fixed-line and mobile telephony in the European Union using cross-section panel data on households’ choices of telecommunications technologies in years 2005–2010. We estimate a structural model of household?s demand for access to: (i) fixed-line only; (ii) mobile only; and (iii) both fixed-line and mobile. We find that growing Internet usage increases the share of ‘fixed + mobile’ households, which suggests that households keep their fixed-line connection to access Internet. However, the spread of 3G and cable broadband access decreases the share of ‘fixed + mobile’ households and increases the share of ‘mobile only’ households. Hence, fixed-to-mobile substitution was slowed down by the spread of Internet but it may continue with the spread of mobile broadband. Furthermore, bundling of telecommunications services increases the share of ‘fixed + mobile’ households and decreases the shares of ‘mobile only’ and ‘fixed only’ households. Therefore, operators which can bundle fixed-line connection with Internet or mobile services may slow down fixed-to-mobile substitution.     

The tribal digital divide: Extent and Explanations

This paper documents home Internet access, types of Internet access, connection speeds, and prices for basic home Internet in tribal areas of the United States. We find that the share of households with Internet access is 21 percentage points lower in tribal areas than in neighboring non-tribal areas. When compared to these non-tribal areas, download speeds, whether measured using fixed or mobile broadband networks, are approximately 75% slower in tribal areas, while the lowest price for basic Internet services in tribal areas is 11% higher. Regression techniques reveal that traditional cost factors such as terrain and population density fully explain the price gap but account for only a fraction of the tribal differences in Internet access and connection speeds. Income differences are strong predictors of Internet access but do not affect connection speeds. A sizable amount of the variation in the access and home connection gap between tribal and non-tribal is left unexplained. We conclude with a discussion of how federal broadband programs have penetrated Indian Country, how tribal-specific factors are related to the variation in Internet access within Indian Country, and the potential policy implications of our findings.     

Closing the rural broadband gap: Promoting adoption of the Internet in rural America

Even as geographic disparities in high speed Internet access narrow, an urban–rural broadband gap persists, pointing to the importance of individual differences in motivations to adopt broadband as the key to closing the gap. Diffusion of innovation is reconceptualized through contemporary perspectives of the digital divide and social cognitive theory and tested on a survey sample drawn from four rural communities. Path analysis was used to examine the factors that cause broadband Internet service adoption in rural communities. Prior experience with the Internet, the expected outcomes of broadband usage, direct personal experience with broadband, and self-efficacy had direct effects on broadband intentions. Age and income, but not education or ethnicity, also had direct impacts. Efforts that promote the personal benefits of broadband and advanced ICT literacy skills among Internet users are recommended.     

The Market Structure of Broadband Telecommunications

The recent growth of the Internet is creating markets for broadband telecommunications networks. In the past, virtually all such 'infrastructure' networks have been subject to government regulation. Two reasons advanced for this market intervention are (i) such networks constitute a natural monopoly, and (ii) to achieve 'universal service', in which all citizens have access to services. In this paper, we develop a model and estimate it using engineering data which tests if these two hypotheses are likely to obtain for broadband networks. We find that oligopolistic competition is likely to emerge for demand levels approaching that of today's cable television.     

Evaluation of USDA's Broadband Loan Program: Impacts on broadband provision

Since 2002 the USDA's Broadband Loan Program has directed more than $1.8 billion in subsidized loans to help expand broadband access in under-served rural communities. Program eligibility criteria included having a population of 20,000 or fewer, having no prior access to broadband, and providing a minimum matching contribution of 15% by recipients of the loan. Loans were extended mainly to small telecommunications services firms at varying (subsidized) interest rates. We evaluate on the effectiveness of the Loan Program in increasing broadband availability in target locations. Specifically, we analyze whether loan receipt increases the number of broadband providers in a particular location, using various count panel methods. Our analysis is conducted at the ZIP code level over the period 1999–2008; it uses broadband provider data from the FCC's Form 477, and loan data from the Rural Utility Service (the implementing agency for the Broadband Loan Program). Results indicate that ZIP codes receiving broadband loans did in fact experience modest, statistically significant increases in the number of broadband providers vis-à-vis non-recipient locations; that average marginal effects on treated ZIP codes were approximately 0.092 additional broadband providers annually; and that these benefits accrued more towards rural locations than urban locations, in conformance with the intent of the program.     

Are Interactive TV-Pioneers and Surfers Different Breeds? Broadband Demand and Asymmetric Cross-Price Effects

We consider two different qualities of broadband access, one that simply means greater access speed to Internet applications and content, and a premium version that also gives access to interactive TV services. Based on a market survey we find that potential consumers of this premium broadband access do not consider basic broadband Internet access as a substitute. The price of basic broadband does not constrain the price that may be charged for the premium broadband that allows for interactive TV services.     

Speed isn't everything: A multi-criteria analysis of the broadband consumer experience in the UK

In this paper, we demonstrate that there is more to consumer experience than just broadband access speed. We identify and describe a complex and dynamic set of interactions that occur between different factors that collectively determine consumer experience. We suggest that the relationship between broadband speed and consumer experience follows an inverted U-shape. Access speed is necessary to provide consumers with a good experience, but it is not sufficient. Based on our findings, a more nuanced understanding of the market for broadband Internet access products is outlined and a foundation for deriving valuable policy implications is developed.     

Multilevel governance and broadband infrastructure development: Evidence from Canada

This paper investigates the contributions of digital infrastructure policies of provincial governments in Canada to the development of broadband networks. Using measurements of broadband network speeds between 2007 and 2011, the paper analyzes potential causes for observed differences in network performance growth across the provinces, including geography, Internet use intensity, platform competition, and provincial broadband policies. The analysis suggests provincial policies that employed public sector procurement power to open access to essential facilities and channeled public investments in Internet backbone infrastructure were associated with the emergence of relatively high quality broadband networks. However, a weak essential facilities regime and regulatory barriers to entry at the national level limit the scope for decentralized policy solutions.     

Innovation patterns and policy implications of ADSL penetration in Korea: A case study

Korea has been leading the world in broadband Internet access services since 1999. Based on an in-depth case analysis of the penetration of asymmetric digital subscriber line (ADSL) in Korea, the present study explores the patterns of decision making and interactions among key innovation actors, such as the government, Internet service providers, equipment providers, and content providers, using a conceptual framework wherein models of innovation systems and decision making under uncertainty are combined. The results revealed that the Korean government played a pivotal role in the creation of the ADSL-based Internet service market by providing a strong vision for this emerging service, building a coalition among various key actors, and stimulating initial market needs and supply of necessary equipment during the early period of higher uncertainty. As the level of uncertainty decreased with market evolution, however, the role of industrial actors and their market competition became more important to the rapid growth of the ADSL market. Based on these findings, policy and managerial implications are proposed.     

Municipal electric utilities’ role in telecommunications services

Municipal electric utilities (MEUs) are increasingly expanding into telecommunications services. Such entry is interesting in several respects. First, MEUs marry two potential pathways for the growth of telecommunications access infrastructure and services: public ownership of last-mile facilities and electric power company expansion into telecommunications. Second, municipalities are key early adopters of next generation access technology in the form of both fiber-to-the-home (FTTH) and broadband wireless (e.g., WiMax) systems. Third, MEUs are at the nexus of the debate over the proper role for local government in promoting broadband Internet access. Most homes in the United States are served by investor-owned local telephone and cable television providers, using company-owned wireline infrastructure. These providers have generally opposed municipal entry, arguing that it will crowd out private investment and represents an unfair and less efficient form of competition. A number of states have acted to limit—or in some cases—to promote such entry. Before engaging in this debate, it is necessary to have a clearer picture of the current state of municipal entry and the local demographic, cost, industry, and policy factors that influence its evolution. To address this need, this paper reports the results of an empirical analysis of MEUs that provide communications services to the public. This analysis shows that MEUs are more likely to offer such services if they also provide internal communication services to support their electric utility operations (scope economies); are relatively close to metropolitan areas (lower backhaul costs); are in markets with fewer competitive alternatives (cable modem and DSL service availability limited); and which are less encumbered by regulatory barriers to entry (in communities in states which do not restrict municipal entry into telecommunication services). Of these results, the competitive impacts are the least straight-forward to interpret, suggesting richer dynamics and avenues for further research.     

Is broadband the future? An analysis of broadband technology potential and diffusion

This paper examines the policy issues surrounding residential broadband technology, discusses how broadband extends Internet capabilities and at what cost, and makes recommendations for future applications of broadband. It focuses on residential broadband access, and in examining the future of broadband, it identifies three areas of concern: regulatory tendencies and tensions in the US, international diffusion of broadband, and the overall consumer appeal of broadband content. Specific policy recommendations center on providing regulation that guarantees open access, enforces reasonable pricing plans, and encourages innovative content.     

Net neutrality and innovation at the core and at the edge

How would abandoning Internet net neutrality affect content providers that have different sizes? We model an Internet broadband provider that can offer a different quality of service (priority) to heterogeneous content providers. Internet users can potentially access all content, although they browse and click ads with different probabilities. Net neutrality regulation effectively protects innovation done at the edge by small content providers. Prioritization, instead, increases both infrastructure core investment and welfare only if it sufficiently stimulates innovation from the large content provider.     

Regional differences in residential demand for very high bandwidth broadband internet in 2025

The future demand for data and the role of gigabit networks are central issues in the context of Next Generation Access (NGA) network roll-out. Based on a generic model, which allows to predict unconstrained future broadband demand in different regions and countries, the authors compare the results for Germany, the UK and the Flemish region, and discuss reasons for the different outcomes. The generic market potential model thereby allows to project the future demand for bandwidth from residential customers on the basis of applications and their bandwidth needs, user profiles and population structure on a household level. Despite a general trend towards an increasing need for broadband, there are clear differences. On the one hand, these point to the relevance of socio-demographic factors for broadband adoption. On the other hand, the relatively high proportion of refusals shows that there is still a need for further educational work on the part of public authorities and providers. Finally, it has to be stated, that our forecast relies on the assumption that connectivity and thus that the availability of area-wide gigabit capable broadband access does not represent a bottleneck.     

Fast Internet: An analysis about capacities,price structures and government intervention

While about 20% of all private households in the US had access to the Internet in 1997, the Internet penetration in Western Europe was significantly lower with little more than 5%. A key factor to explain the different penetration levels in the US and Western Europe is the pricing policy. In the US the pricing is heavily influenced by regulation. The flat rate pricing for local service stimulated rapid growth of the Internet. However, the regulatory regime that helped the Internet to succeed is now threatened by the same success. A comparison of the Internet in the US and the videotex systems deployed in France and Germany in the 1980s reveals an astonishing number of similarities. But there remains one significant difference, the pricing policy. Today, the telephony access network is perceived as a bottleneck by Internet users. Users demand more speed. Given the expected growth of the Internet and the demand for speed, the US telecommunications industry invests heavily in the local loop and sets up another four national long-distance networks. These investors do believe that demand for capacity will make a quantum leap.     

Evolution of the internet gender gaps in Spain and effects of the Covid-19 pandemic

There is a widely accepted belief in new technologies that the digital divide in using a service will disappear as the service reaches an advanced level of maturity. The work presented here shows that this idea is debatable. Data from Spain, a country where daily internet users are 75.9 percent of the population, prove that the gender gap still exists. The paper explores if this gap can be entirely explained by the socioeconomic differences between men and women. We build a micro panel model and incorporate a set of socioeconomic variables (age, education, income, employment status, digital skills, and resident population) that allow us to isolate the effects of gender on the decision to become a daily Internet user. The results conclude that the Internet gap is a phenomenon with a specific gender component. Other things being equal a woman negatively affects the probability of using the Internet. Applying a similar model to 15 Internet services, we obtain that gender is always significant to explain the likelihood of being a user of each service. However, in some services (7 out of 15), the effect is favorable to women, and for other services (8), the gender effect favors men. The work concludes by analyzing the impact of the first wave of the Covid-19 pandemic on the use of Internet services, paying particular attention to its possible implications for the gender gap.