Broadband and contributions to economic growth: Lessons from the US experience

The connection between broadband deployment and economic prosperity in the United States has garnered public attention due to stimulus plan funding authorized in February 2009 for broadband planning and deployment initiatives. The importance of innovation for a nation's economic well-being is fairly well understood. Through a literature survey, this article analyzes the connection between information and communications technologies and economic growth, as well as the connection between broadband and economic growth. There appears to be a positive economic impact from expanded broadband deployment and adoption. However, various research challenges including methodological problems and access to sufficiently granular data have prevented the authors from drawing more definitive conclusions from the US broadband experience. Another finding is the time lag for businesses to effectively exploit innovative broadband applications.     

Rural broadband: The provider matters

As broadband use has grown over the past few years, scholars and policymakers have turned some of their attention to the urban-rural broadband divide. While existing research offers important insights into this divide, no research has fully explored the differences in broadband deployment patterns among various types of telecommunications providers, including both large and small telephone and cable providers. Through data collected from interviews with telecommunications company representatives, this research assesses the extent to which different types of providers are deploying broadband in urban and rural areas. The interviews are also used to ascertain factors shaping the broadband deployment decision-making process for different types of providers. Both the quantitative and qualitative elements of this research demonstrate clear patterns among different types of providers in relation to rural broadband deployment, as different types of companies are influenced by somewhat unique regulations, competitiveness concerns, resource levels, and existing infrastructure conditions.     

Broadband adoption,jobs and wages in the US telecommunications industry

This article evaluates the impact of broadband adoption on wage and employment levels among the local exchange companies in the US telecommunications industry for the period between 1988 and 2001. Broadband is a general purpose technology and its adoption and diffusion is expected positively to impact wages because of the need for higher level skill in its deployment and usage, but can also lead to less human capital usage because of a scale effect. Using the extent of fiber adoption among the local exchange firms as a measure of broadband deployment, it was found that broadband diffusion within and between the firms over time has had a positive and significant impact on wage levels but its impact on employment has been negative. As broadband diffusion increases, with substantial scope available to do so given the low levels of deployment both among the local exchange firms studied and within the United States as a whole, the impact of such diffusion on enhancing wage levels in the sector can be profound.     

Improving the FTTH business case–A joint telco-utility network rollout model

Fiber to the home networks are seen as the most future proof technology to offer increasing bandwidth to customers. The publication of the Digital Agenda has put forward challenging goals for the broadband connectivity in Europe, but the rollout of next generation fixed access networks is still lagging. One of the reasons is the high initial investment cost associated with the rollout of these networks. To decrease this cost, a cooperation model between utility operators during the deployment phase is proposed in this paper. A model has been developed, in order to optimize the position of the different infrastructures in the trench and to allow for a fair allocation of the different costs incurred between all cooperating parties. The combination of these models has shown that a synergetic deployment phase of new infrastructures, both in Greenfield and Brownfield installations, can decrease the deployment costs for fiber infrastructure up to 21%.     

Race to the top: Does competition in the DSL market matter for fibre penetration?

High speed broadband creates potential productivity gains and has a positive impact on economic growth. Achieving Europe's broadband access objectives will require large scale investment in next generation broadband networks, and it is imperative that an appropriate investment climate is created to encourage fibre network rollout. This study considers whether and how competition in the DSL market affects the incentives of operators to invest in the deployment of high-end fibre optic networks. Most earlier research on the drivers of investment in broadband technology has focused on the effect of mandatory access policies, such as local loop unbundling, or competing infrastructures. We posit that competition in the DSL sector may also influence fibre penetration, possibly to a considerable extent. We find that the relationship between service-based competition and fibre penetration is non-linear: a lack of or severe DSL competition is correlated with a negative effect on fibre penetration, but if a moderate degree of competition is already present in the market, more service-based competition may positively influence fibre penetration. The scale of these effects however varies with the openness of the DSL market: operators' incentives to invest in fibre appear to be more sensitive to changes in DSL competition if there is extensive local loop unbundling.     

A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties

This study aims to assess the economic benefits of high-speed broadband within and across neighboring counties in Germany. Utilizing a balanced panel dataset of 401 German counties with data from 2010 to 2015 as well as different panel estimation techniques, we find that an increase in average broadband speed has a significantly positive effect on regional GDP in the average German county. Furthermore, we find that broadband deployment in German counties induces not only substantial economic benefits in terms of direct effects within counties but also positive regional externalities across counties. According to our estimation results, an increase in average bandwidth speed by one unit (1 Mbit/s) induces a rise in regional GDP of 0.18%. This effect is almost doubled if we also take regional externalities into account (0.31%). Moreover, we find that regional agglomeraton effects are of particular relevance for rural counties. Our cost-benefit analysis of subsidies based on conservative estimates suggests efficiency gains, as the total economic per capita benefits (€164) of subsidy programs to encourage broadband expansion exceeded their associated per capita costs (€114).     

The Indian broadband plan: A review and implications for theory

Given the benefits of ubiquitous broadband deployment and availability that include economic growth, participation in the Internet economy and increased competitiveness, several countries have launched major national initiatives to accelerate broadband deployment including supporting such initiatives often as a part of their fiscal stimulus plans. These include Afghanistan, Australia, Brazil, India, Japan, New Zealand, South Korea, Singapore, Sweden, UK and USA and the European Union as a whole.     

Unbundling the incumbent and deployment of high-speed internet: Evidence from France

In this paper, we study the impact of competition on the legacy copper network on the deployment of high-speed broadband. We first develop a theoretical model, which shows that the relation between the number of competitors and investment in a quality-improving technology can be positive if the quality of the new technology is high enough, and is negative otherwise. We test these theoretical predictions using data on broadband deployments in France in more than 36,000 local municipalities. First, using panel data over the period 2011–2014, we estimate a model of entry into local markets by alternative operators using local loop unbundling (LLU). Second, using cross-sectional data for the year 2015, we estimate how the number of LLU entrants impacts the deployment of high-speed broadband with speed of 30 Mbps or more by means of VDSL, cable and fiber technologies, controlling for the endogeneity of LLU entry. We find that a higher number of LLU competitors in a municipality implies lower incentives to deploy and expand coverage of high-speed broadband with speed of 30 Mbps or more.     

Examining the prospects for Gigabit Broadband: Lessons learned from Google Fiber

This study examines possible lessons learned from the deployment of residential Gigabit networks based upon the novel approach taken by the Google Fiber project started in 2010. Even though Google Fiber paused any project expansion in 2016, calling into question the viability of their business model, the approach taken by Google Fiber elicits further research interest given four major innovations that this analysis identifies in its fiber-to-the-home business model. Based on a “top-down” financial model to estimate the costs of fiber deployment, this analysis shows that these four innovations pursued by Google Fiber, and now adopted on a widespread basis by other broadband providers, lower the costs of building residential Gigabit networks, and therefore can improve the prospects for new entry of service providers of residential broadband services. With technology advances pointing to further cost reductions in the cost of Gigabit networks, this analysis elevates the need for more detailed study of ongoing changes in the cost structure of local access networks to better anticipate future prospects for broadband competition.     

A longitudinal analysis of broadband provision in tribal areas

While disparities in broadband in rural areas are well documented, little research exists about broadband in tribal communities. This gap means we lack information about the trajectory of broadband deployment in tribal areas. It also means we lack comparative information about the similarities or differences in the trajectory of broadband deployment in tribal areas compared to non-tribal areas (e.g. urban and rural areas). To address this gap in our knowledge, this study utilizes longitudinal tract data constructed from information in the FCC Form 477 database to analyze broadband provision in tribal areas from 2014 to 2020. Empirical results show that rural tribes may be falling further behind the rest of the nation in broadband provision, while metropolitan tribal areas now enjoy better provision levels, on average, than their non-tribal counterparts. Additionally, the nuances of broadband distributions across tribal, rural, and urban areas make clear that a one-size-fits-all policy to aid tribal communities is inappropriate to address these and other related challenges. This is especially true as concerns about the intersection of federal broadband policy with tribal sovereignty and self-determination emerge.     

Next Generation Access (NGA) supply side interventions—An international comparison

Over the last years, technical and economic developments towards the deployment of Next Generation (Access) Networks have triggered discussions under which circumstances investments into physical infrastructure are economically viable. In many countries the discussion has arisen regarding conditions under which private investment will/will not be undertaken and whether or not in such cases public policy measures should support deployment. This could come in different ways—from incentivizing private investments to deploying new “state-owned” networks. Public policy can have an impact for example by intervening into a competitive market. The paper tries to provide answers as to “why” such interventions and supply side policies are undertaken (thereby referring to the central role that broadband infrastructures have for the economy) and “how” such interventions take place, for example an analysis of the public policy interventions to drive Next Generation Access Network deployment. The article thereby derives policy patterns that have occurred in different regions of the world.     

Public-private partnership for building a resilient broadband infrastructure in Puerto Rico

This article will explore the use of an innovative approach to a public-private partnership (PPP) to spur the deployment of broadband and create more resilient telecommunications networks in Puerto Rico. Such a partnership is a critical ingredient of the plan for rebuilding the telecommunications sector of Puerto Rico after the island was devastated by Hurricanes Irma and Maria in September 2017. The proposed partnership also has the potential for enabling the expansion of citizen access to broadband services throughout Puerto Rico. This work was done as part of the Congressionally mandated economic and disaster recovery plan for the island.     

Broadband access in the EU: An assessment of future economic benefits

This paper evaluates the net economic benefits that would derive from the implementation of the broadband infrastructure deployment targets by 2020 as entailed by the Digital Agenda for Europe Initiative set forth by the European Commission. As a first step, we estimate the returns from broadband infrastructure for the period 2005–2011, differentiating the impact of broadband by levels of adoption and speed while accounting for reverse causality and extensive heterogeneity. In the second step, the cost of broadband roll-out is assessed under different assumptions of technical performance and contrasted with the forecasted benefits that derive from increased broadband coverage. We find that in the base case scenario the overall future benefits outweigh the investment costs for the European Union as a whole for the highest performance technologies. This holds also for the majority of member states individually. We further extrapolate the returns by country under different scenarios of implementation. In most cases the benefits are substantially well above the costs. Private sector is reluctant to invest, as investors in broadband infrastructure only can partially appropriate benefits. This would suggest a rationale for the public sector to subsidize build-out of high speed broadband infrastructure.     

Revisiting Wireless Internet Connectivity: 5G vs Wi-Fi 6

In recent years, significant attention has been directed toward the fifth generation of wireless broadband connectivity known as ‘5G’, currently being deployed by Mobile Network Operators. Surprisingly, there has been considerably less attention paid to ‘Wi-Fi 6’, the new IEEE 802.1ax standard in the family of Wireless Local Area Network technologies with features targeting private, edge-networks. This paper revisits the suitability of cellular and Wi-Fi in delivering high-speed wireless Internet connectivity. Both technologies aspire to deliver significantly enhanced performance, enabling each to deliver much faster wireless broadband connectivity, and provide further support for the Internet of Things and Machine-to-Machine communications, positioning the two technologies as technical substitutes in many usage scenarios. We conclude that both are likely to play important roles in the future, and simultaneously serve as competitors and complements. We anticipate that 5G will remain the preferred technology for wide-area coverage, while Wi-Fi 6 will remain the preferred technology for indoor use, thanks to its much lower deployment costs. However, the traditional boundaries that differentiated earlier generations of cellular and Wi-Fi are blurring. Proponents of one technology may argue for the benefits of their chosen technology displacing the other, requesting regulatory policies that would serve to tilt the marketplace in their favour. We believe such efforts need to be resisted, and that both technologies have important roles to play in the marketplace, based on the needs of heterogeneous use cases. Both technologies should contribute to achieving the goal of providing affordable, reliable, and ubiquitously available high-capacity wireless broadband connectivity.     

The Year in Economics at the FCC: A National Plan for Broadband

The past year in economics at the Federal Communications Commission (FCC) has focused on encouraging the adoption and deployment of high capacity Internet access and the associated networks, commonly termed “broadband.” Our article sketches important economic themes in the FCC’s National Broadband Plan to show how the application of basic principles of regulatory economics takes account of rapid technological change. We discuss natural monopoly regulation, externalities and cross-subsidies, network effects and interconnection, the allocation of scarce inputs, protecting and fostering competitive markets, and consumer protection and transparency as they apply to the development of broadband.     

Evaluating the effects of ICT core elements on CO2 emissions: Recent evidence from OECD countries

This research aimed to inform policymakers about the actual climate relevance of the information and communication technology (ICT) ecosystem, which includes data centers and content provision, broadband networks, and consumer devices. To provide robust empirical evidence on the net environmental impact of these core ICT elements, we used OECD panel data for 34 Member States for the years 2002–2019 and panel fixed-effects regression models. In contrast to previous literature, we measured basic broadband and new fiber-based wireline broadband and 3G/4G mobile broadband network deployment. We also captured variations in end-user devices, ICT affinity, and famous online content. We found that, on average, the CO₂-reducing effects appear to outweigh the CO₂-increasing effects. In particular, we found that, in addition to the reduction effect associated with the use of basic broadband connections, there is a further, albeit smaller, reduction effect associated with new fiber-based broadband connections. Other ICT elements showed insignificant coefficient estimates, suggesting largely offsetting environmental impacts. Our main findings were subject to various robustness checks and were broadly consistent with previous literature using data from developed countries. Our results suggested that old and new broadband networks as enabling technology could generate positive environmental effects for society.     

“Open access:” the ideal and the real

“Open access” would allow ISPs to use a cable operator's broadband connection under regulated terms and conditions. Advocates stress the desirability of an “end-to-end” architecture for the Internet and the danger that cable operators will use their control over the last mile to limit consumer choice and stifle innovation. Opponents contend that wholesale price controls and other regulatory burdens under what they term “forced access” would in fact slow down the deployment of broadband, stifle innovation and harm consumers. The fears of “open access” advocates seem largely speculative at this point. Evidence from related policies also favors the opponents. “Closed” cable systems are beating their “open” DSL competitors in the market place; analogous regulation of cable TV did not serve consumers well; and forced “unbundling” of local service has been controversial and largely ineffective. In addition, relevant technology stocks declined in price with political and legal victories for “open access” and increased when it suffered setbacks.     

Accelerating the development of Latin American digital ecosystem and implications for broadband policy

In the past ten years the Latin American and Caribbean region has been advancing in terms of various digitization metrics, such as the deployment of broadband infrastructure, and the adoption of the Internet and social media. However, despite the significant progress in terms of digitization of consumption,¹ the region faces still some important development challenges of its digital economy. This paper attempts to identify what the future challenges are for Latin America and the Caribbean, which raises a number of research and policy questions: (1) How close is consumer digitization in Latin America and the Caribbean to the levels observed in industrialized countries? (2) How should Latin America and the Caribbean address the broadband and Internet demand gap of the non-adopting population? (3) Are current digitization trends homogeneous across countries in the region or do we observe a divergence across countries, indicating some advanced nations approaching industrialized country performance, while others lagging? (4) If infrastructure and consumer adoption of certain digital products and services is evolving at a fast pace, what are the upcoming digitization challenges? (5) If broadband is a critical lever for the development of digitization, what are the policies to be implemented by Latin American and Caribbean governments to maximize investment for deployment of last generation technologies and promote adoption? To answer these questions the authors have developed, with support of CAF Latin American Development Bank, a comprehensive digitization index. This new index is used to assess the development of Latin America and the Caribbean region vis-à-vis industrialized countries. On this basis, an econometric model is developed to measure the economic development impact of digitization. Zeroing in on broadband as a critical lever for the development of the digital economy, a set of infrastructure investment and adoption goals is defined for different countries in the region. Finally, public policies are recommended to achieving the established goals.     

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.