Go for Gigabit? First Evidence on Economic Benefits of (Ultra-)Fast Broadband Technologies in Europe

37 Pages Posted: 20 Apr 2018

See all articles by Wolfgang Briglauer

Wolfgang Briglauer

ZEW – Leibniz Centre for European Economic Research

Klaus Peter Gugler

Vienna University of Economics and Business; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: 2018

Abstract

The literature on the effects of telecommunications infrastructure investments find positive macroeconomic effects, however, it is severely constrained because it could hitherto only analyze investment up to “basic” broadband but not up to the newer generations of “fast” and “ultra-fast” broadband; in particular there is no such evidence available at the EU level so far. Utilizing a comprehensive panel dataset of EU27 member states for the period from 2003-2015, we estimate a small but significant effect of fiber-based ultra-fast broadband over and above the effects of basic broadband on GDP. Adoption of hybrid-fiber fast broadband is incrementally to basic broadband insignificant. Our cost-benefit analysis implies that policy intervention – as foreseen by the European Commission in its public policy targets – is only justified for coverage and adoption levels of around 50% of fast or ultra-fast broadband, whereas for 100% coverage levels we find net losses to society. Thus, it appears that – for the time being and according to the policy principle of “technological neutrality” – a combination of basic broadband, fast and ultra-fast broadband entails the largest economic net benefits to society.

Keywords: new broadband networks; broadband speed; economic growth; EU-panel data

JEL Classification: 047; L96

Suggested Citation

Briglauer, Wolfgang and Gugler, Klaus, Go for Gigabit? First Evidence on Economic Benefits of (Ultra-)Fast Broadband Technologies in Europe (2018). ZEW - Centre for European Economic Research Discussion Paper No. 18-020. Available at SSRN: https://ssrn.com/abstract=3165417 or http://dx.doi.org/10.2139/ssrn.3165417

Wolfgang Briglauer (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Klaus Gugler

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

HOME PAGE: http://www.wu.ac.at/iqv/mitarbeiter/gugler

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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