Whither policy design for broadband penetration? Evidence from 30 OECD countries

This paper aims to empirically investigate the impact of a vast array of public policies on wireline broadband penetration through a novel and unique dataset covering 30 OECD countries, over the period 1995–2010. Estimation results show that, while both supply- and demand-side policies have a positive effect on broadband penetration, their relative impact depends on the actual stage of broadband diffusion. When an advanced stage is reached, only demand-side policies appear to generate a positive and increasing effect. The analysis also finds that broadband adoption rates increase with the share of the service sector in the economy, with the number of mobile subscriptions and with the degree of market competition. This study thus allows to attain a more refined understanding of past experiences of broadband stimulation that may provide new insights for a selective policy design to promote both the development of traditional broadband and the rollout of next generation networks.

► The paper presents the results of an explorative empirical study on the effectiveness of demand-side and supply-side policies on wireline broadband penetration.
► Policies’ relative impact depends on the actual stage of broadband diffusion.
► Impact of supply-side policies decreases and impact of demand-side policies increases with broadband penetration.
► Broadband adoption rates increase with the share of the service sector in the economy, with the number of mobile subscriptions and with the degree of market competition.
► The paper concludes that selective and articulated policy design is needed to promote broadband.