Why Should Governments Support Broadband Adoption?
Public Policy Institute of California Working Paper No. 2007-01
46 Pages Posted: 14 May 2007
Date Written: January 2007
Governments justify support of Internet diffusion on two grounds: (1) to overcome a persistent digital divide in broadband availability and (2) to facilitate online activities that are socially or economically desirable. This paper assesses both these claims. Using individual-level data from Forrester Research, the analysis finds significantly lower residential broadband adoption in lower-income and lower-density zip codes, controlling for individual characteristics. Further tests show that lower adoption in these areas is evidence of a persistent digital divide in availability. The analysis then assesses how broadband adoption changes individuals' usage of online activities. Broadband adoption increases individuals' frequency of researching health information online, but there is no evidence that broadband adoption increases usage of online job sites or online government services. Localities currently considering municipal wireless (Wi-Fi) initiatives should focus on digital divide justifications rather than expecting to raise usage of a wide range of online activities perceived to be socially desirable.
Keywords: broadband, Internet, digital divide, online, consumer behavior
JEL Classification: D12, L96, O33, O38
Suggested Citation: Suggested Citation