Lemons on the Edge of the Internet: The Importance of Transparency for Broadband Network Quality

Abstract

Network performance measurements from OECD countries between 2007 and 2012 document a significant increase in the variability of broadband infrastructure quality, which helps explain growing demand for technologies and policies that counteract information asymmetries between network operators and end users. A cross-country analysis documents the negative association between quality uncertainty and variations in digital infrastructure quality. The analysis suggests public policies and business models that promote market transparency can enhance the efficiency of the broadband access market on the edge of the internet and stimulate incentives for the diffusion of next generation platforms.

Keywords: broadband internet, quality uncertainty, market efficiency, technological change

JEL Classification: L86, L15, M21, K12