Critical factors for the expansion of broadband in developing countries: The case of Peru

Many studies have been made on the diffusion and development of broadband, however there are few published studies on the critical factors for advancing broadband services in developing countries. Thus, the purpose of this paper is to understand and identify the critical success factors for the development of broadband services in a developing country context, using the case of Peru. In this regard, this study uses data collected from interviews with Peruvian telecommunications professionals, policy makers and regional telecommunication experts, which is supplemented by official reports and statistical data to determine the critical success factors for broadband in this country. The four factors derived are; (i) expand the availability of infrastructure, (ii) define a national broadband policy that aligns the interests of stakeholders, (iii) develop effective competition in the broadband market, and (iv) stimulate the demand for broadband services. Through a MACTOR analysis the authors found that the objectives of sharing infrastructure, the further deployment of infrastructure and the development of competition in the market for broadband services are those that generate the most divergence between actors. Additionally, the MACTOR analysis determined that no disagreement existed for the objectives related to demand stimulation. Thus, four proposals are offered for the development of Peruvian broadband. The results are relevant for academics and policy makers interested broadband development in developing countries and for rural areas of developed countries.     

Unbundling and infrastructure competition for broadband adoption: Implications for NGA regulation

The common idea of open access policy is that it refers to the sharing of particular elements, such as wholesale access networks, backhaul, under-sea cable and internet exchange points in fixed and mobile networks. In broadband networks, the use of open access policy usually refers to the infrastructure parts, which are considered a bottleneck. Many regulators have generally focused open access policy on fixed broadband networks, especially digital subscriber line (DSL) technology, in the last decade. Local loop unbundling (LLU) regulation is one of the main strategies for the regulator to open access to an incumbent’s bottleneck network in order to soften its monopoly power and encourage competition in the DSL broadband market. The OECD countries have different strategies regarding unbundling local loop and infrastructure competition, as the characteristics and infrastructure networks of countries vary. There are currently more choices of next generation network (NGN) technologies to develop. While local loop unbundling may not be applied fully to NGN development (the cost is not sunk, more technologies are available to implement, incentive of investment by operator), it can indicate benefits and drawbacks of open access policy in the past decade that can be adapted to NGN.The empirical results of this study show that during 2002–2008, LLU regulation was one of the strategies used to increase broadband adoption in countries that had difficulty encouraging infrastructure competition. Unbundling regulation can therefore be implemented carefully and differently in each country that has inefficiency that is harmful to consumers in its market from a monopoly incumbent. Infrastructure competition, on the other hand, is introduced as another strategy to increase broadband adoption. The empirical results of this study indicate that infrastructure competition can be used as a strategy when there are already enough infrastructures in the area or country. These results support the idea of using open access and infrastructure competition policy depending on the existing competition of broadband infrastructure in each country.     

Broadband achievement index: Moving beyond availability

High-speed access to the Internet enhances economic prosperity, social development and global competitiveness. Significant progress has been made in broadband deployment in the last decade. Nevertheless, there are increasing gaps in broadband adoption, use and speed between, as well as within, the states. Federal and state legislators and regulators currently use a number of indicators such as adoption, availability and speed to track states’ progress in broadband diffusion in order to design appropriate policy responses. Single indicators, however, when analyzed individually, fall short of capturing multi-dimensional aspects of broadband diffusion and, thus, do not provide an integrated and easily comprehensible picture of states’ advancement. To monitor states’ overall progress it is useful to aggregate various indicators into a composite index that could measure the overall extent of broadband diffusion. A composite index can also provide with an important benchmark for designing policies to improve states’ overall performance. This paper offers a flexible framework for benchmarking states’ achievement in broadband diffusion by proposing a composite Broadband Achievement Index (BAI). The index combines several key performance indicators: broadband availability, adoption, competition, speed and the dispersion of broadband adoption within the states utilizing FCC's Form 477 data and the recently collected census block level broadband availability data from NTIA. The purpose is to provide a more comprehensive picture of where the states stand in their evolution toward high-performance America by measuring each state's current broadband achievement relative to other states and providing an important benchmark for assessing state-specific needs. The indicators are combined using the Benefit of the Doubt (BOD) methodology (Cherchye, Moesen, & Van Puyenbroeck, 2004). The methodology is founded on the premise that, absent a consensus on social policy priorities, that are, on which indicators are more important and should be given higher weights in the index, each state is granted leeway for deciding how to weigh its own indicators and the most favorable weights for indicators are determined for each state. A good relative performance in a particular dimension is seen as revealed evidence of setting high state policy priority to that indicator, when each state's specific policy priorities are unknown. Additionally, the Second Order Stochastic Dominance (SOSD) methodology is used to compare the dispersion of adoption in the states. Using SOSD the states are ranked under the assumption that proportionally higher and more equally distributed adoption rates are better.     

Segmental new-product diffusion of residential broadband services

Aggregate models of innovation diffusion do not capitalise on valuable consumer adoption dynamics that may be useful to policy makers and market planners. The non-diffusion choice literature shows quite clearly that these dynamics may indeed be very important factors in the diffusion process. The authors present a segmental broadband diffusion model that is estimated from consumer survey data that measure the effect that household income has on its propensity to adopt this technological product. The results suggest that early broadband adopters are mostly made up from wealthy households and only as time progresses do less well off households adopt. The findings presented in this paper will be important to market planners and policy makers requiring a relatively simple technique that forecasts segmental innovation diffusion.     

Broadband expectations and the convergence of ranks

Broadband Internet service to widely held to be a significant contributor to economic development and global competitiveness, and comparison of adoption rates across countries are common. This paper presents evidence that the relative broadband Internet adoption ranks across the Organisation for Economic Co-Operation and Development (“OECD”) countries are converging to the wireline telephone adoption ranks in the mid 1990s. This was a time when wireline telephone service had reached maturity, but before consumers began to abandon traditional telephone services for mobile services and Internet telephone technologies. As such, in the absence of better data on household adoption, wireline telephone rank is a useful proxy for a country's ultimate fixed-line broadband penetration rank. Having such an educated guess available regarding broadband rank should reduce the amount of anxiety over rankings, since similar rankings across the two services implies suitable broadband performance. Large departures, alternately, may be a cause for concern or delight. Like prior analyses, the findings suggest that the adoption of communications services is largely an economic and demographic issue.     

Different paths to universal access: The impact of policy and regulation on broadband diffusion in the developed and developing worlds

The authors examine the broadband digital divide by analyzing the impact of policy and regulation on broadband Internet diffusion. Their multiple regression analysis shows factors that determine broadband diffusion in technologically developed countries do not necessarily have the same impact in less developed countries. They show that in technologically developed countries, there is greater broadband diffusion in countries that make a higher financial investment in information and communication technologies (ICTs), have effective governing practices at the national level, have higher levels of education, and are more urban. In technologically developing nations, a competitive telecommunications sector and higher investment in ICTs lead to greater broadband diffusion, with investment having an even larger impact in the developing world than in the developed world. In addition, stronger democratic political institutions, higher levels of national income and lower levels of income inequality increase diffusion, but the presence of a national telecommunications regulatory authority has a negative impact. These results suggest that the path to widespread availability and use of broadband requires different strategies depending on a nation's level of technological development.     

Broadband diffusion in remote and rural Scotland

There is considerable interest worldwide in broadband diffusion, with research focusing on aspects such as the provision of broadband in remote areas and the socio-economic factors that determine the likelihood of adoption. This paper identifies the policies and initiatives used to encourage broadband awareness, availability and adoption in remote and rural Scotland. Complementary and (in some cases) contradictory policies are explored and areas where policy may be applied in the future suggested. Influence diagrams are used to investigate the impact of different policies on take-up rate and total adoption.     

Analysis of an integrated plan for expanding broadband access in Colombia

Colombian telecommunications exhibit remarkable growth in the mobile sector and television market evolution and some degree of stagnation in fixed telephony and broadband access. Only recently the Colombian government has started to seriously address the need to deploy a plan for rapid and effective broadband growth, adding to the worldwide wave of government planned investments on fibre-optic broadband access expansion. This paper analyses the current state of the Colombian government’s broadband plan, named Vive Digital, comparing its proposed actions with the plans and achievements of three OECD countries’ experiences on broadband policies. Several aspects, either collectively or individually, from the three international cases are used as guidelines of what an integrated, efficient broadband policy may be. The analysis takes consideration of the contextual differences between the studied cases for the benefit of identifying the strengths and weaknesses of the Colombian plan, and is focused on the incentive structure needed to advance the development of infrastructure, services, applications and user involvement.     

Economic impacts of mobile versus fixed broadband

Broadband telecommunication service is growing rapidly and its economic impact is likely to vary considerably around the globe. Considerable interest is being shown in wireless broadband, especially in low income and rural areas. This study focuses on the direct effect (broadband penetration as an input), and separately, the productive efficiency effect of broadband (as an information network externality), using a model developed in Thompson and Garbacz (2007). Aggregate fixed and mobile broadband usage and their effect are analyzed and compared first on a sample of forty-three countries with sufficient data. The same models are used on samples of high income and low income countries. It is hypothesized that the rapid growth of broadband could have a stronger effect for low income countries and their initial levels of network development. Key variables are adjusted to a per household basis, using information on household size. Due to the endogeneity of key variables, instrumental variables are employed to estimate separate equations for mobile broadband and fixed broadband. Predicted values for these variables are used in the final equations in order to adjust for endogeneity and omitted variable bias. The results of the model estimated for the full sample indicate that mobile broadband has an important direct effect on GDP, but fixed broadband has an effect no different than zero. In the models with high and low income samples it is apparent that low income countries derive significantly more benefit from mobile broadband. Estimates from the Stochastic Frontier Model find mobile broadband to be a significant driver of growth via a reduction of inefficiency.     

User motivation for broadband: A rural Danish study

The diffusion of broadband has gained much research attention, in particular in relation to the urban-rural divide. However, research has focused primarily on the supply side of broadband roll-out, while the demand side has been somewhat neglected. This article illustrates the complexity of broadband adoption and argues that a rural adoption approach needs to draw on existing social meaning systems. By focusing on the user motivation for broadband, this article presents findings from a qualitative study of rural residents. Means-end theory was used as a framework for understanding these motives. Furthermore, the article adapts the FCB grid as a tool for both public and private providers of broadband to examine effective rural promotion strategy.     

Price elasticity of demand for broadband: Evidence from Latin America and the Caribbean

In this study the authors analyze fixed broadband retail prices in Latin America and the Caribbean (LAC), and provide estimates about the effect of price changes on broadband adoption. The analysis is based on a survey of plans and tariffs conducted by the authors during Q2 2010. Their results suggest that fixed broadband services in LAC are generally expensive and of poor quality when benchmarked against Organisation for Economic Co-operation and Development (OECD) countries, although there is significant variance between markets in the region. In order to isolate the effect of prices on broadband adoption they use an instrumental-variable approach. Their findings show that broadband demand is relatively elastic to price in LAC but not in the OECD. They estimate that an average price reduction of 10% would result in an increase of almost 22% in the penetration rate in LAC, equivalent to almost 8.5 million additional broadband connections. Several policy implications result from these findings. First, national broadband policies in LAC should pay a closer attention to a deficit of competition in fixed broadband services, as households and firms face high prices for poor quality services, thus deterring adoption. Second, while their findings generally suggest that price reductions could significantly increase penetration, they elasticity estimates reveal that price effects might not be sufficient to achieve the penetration goals set in national broadband plans. This validates the need for complementary policy strategies that affect other determinants of broadband demand. The example of Brazil is used to illustrate this finding.     

Dimensions of broadband policies and developments

There is a continuous discussion on the development and comparison of broadband infrastructures and broadband strategies of different countries and regions around the world. Is the US ahead of Europe, or is it the other way round, and how about East Asian countries? And, are there any policy reasons for it? The paper discusses three of the fundamental dimensions in broadband policies: Infrastructure vs. Service competition, regulatory vs. Developmental policies, and networks vs. Content prioritization. It examines the diverse combinations of these policy dimensions with respect to 7 countries in Europe, Asia and North America. The paper concludes that all three dimensions are found in the broadband policies of all the countries but that there are differences in the prominence of the dimensions in the individual countries.     

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 economic impact of mobile broadband speed

Based on panel data of 116 countries in 2014–2019, this paper investigates the association between mobile broadband speed and labor productivity. It finds no robust contemporaneous relationship for the total sample, but there is a significant and robust association when a one-year lag of mobile broadband speed is introduced. The interpretation of the results is that a 10 percent increase in mobile broadband speed in period t-1 is associated with 0.2 percent increase in labor productivity, ceteris paribus. The results are only robust for non-OECD and low-income countries, respectively.     

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.     

Disparities in ICT adoption: A multidimensional approach to study the cross-country digital divide

This paper presents a cross-country study on the determinants of information and communication technology (ICT) diffusion using multivariate analysis techniques to capture the relative and multidimensional character of digital divide. Using canonical correlation analysis, the differences detected between groups of countries both in terms of ICT patterns and in terms of the factors explaining each are compared. The results provide the ability to distinguish between different patterns of ICT adoption that can be explained primarily by variables associated with differences in development levels. In countries registering higher levels of ICT adoption, the digitalization pattern is explained by GDP, service sector, education, and governmental effectiveness. In contrast, in developing countries, population age and urban population are positively associated with the ICT adoption, while Internet costs impact negatively. The results might be useful in finding and implementing the most suitable telecommunication and development policies for each case.