The Broadband Efficiency Index: What Really Drives Broadband Adoption Across the OECD?
Phoenix Center Policy Paper No. 33
27 Pages Posted: 31 Jul 2008
Date Written: May 28, 2008
In this Paper, we assess the performance and efficiency of OECD countries with respect to broadband Internet subscription. Using the econometric technique of Stochastic Frontier Analysis, we estimate scores indicating the efficiency with which a country converts its economic and demographic endowments into broadband subscriptions. With very few exceptions, we find that broadband subscription in OECD countries is consistent with those endowments -- about two thirds of OECD countries have an efficiency rate of 95% or better. Significantly, the United States has an efficiency index of 96.7%, which is slightly higher than Japan (96.3%) and Korea (95.8%). Consistent with earlier research, we find that economic and demographic endowments explain nearly all of the variation in broadband subscriptions (91%). This finding suggests that public policy's role for broadband adoption may be more effective if it is targeted at improving or mitigating the adverse effects of those underlying demographic and economic conditions, such as computer ownership and education programs. Finally, because countries have different demographic and economic conditions, the most effective mix of policies will vary from country-to-country. As such, our findings indicate that blindly following the policies of countries "ranked" higher in the OECD raw rankings is not likely to result in optimal success.
Keywords: Broadband Efficiency Index, OECD, broadband rankings, broadband adoption
JEL Classification: K23, L51, L96, O38
Suggested Citation: Suggested Citation