The Diffusion of Broadband Telecommunications in the U.S. - The Role of Different Forms of Competition

Abstract

Panel data analysis for the U.S. states indicates that the speed of broadband diffusion is clearly driven by inter-platform competition while competition on the platform has an ambiguous if not negative impact. The diffusion speed diminishes with the number of firms and the size of the firms. For ADSL lowering the market share of the incumbent is beneficial as long as the market detained by the entrants is not too fragmented. Increasing the density of central offices does point toward faster diffusion whereas upgrading them for equal access plays little role in affecting diffusion speed. The results suggest that regulatory policy should be aimed at creating investment incentives that promote facility-based entry to foster rather inter-platform competition than intra-platform competition.

Keywords: Broadband, diffusion of technology, competition

JEL Classification: L96, D41