Global diffusion of broadband: The impact of unbundling policies and cross ownership

Demand for broadband Internet access is growing rapidly across countries. However, broadband has not developed uniformly throughout the world. Recent data provide evidence that the gap between developed countries and developing countries is once again increasing. To be able to bridge this "digital divide", it is important for policy makers to know what factors explain the differences across countries in broadband diffusion. The main proposition offered here is that broadband diffusion has been driven by neither technological nor purely economic factors alone but rather the influence of public policies and regulation. This dissertation analyzes the impact of unbundling polices and cross ownership on broadband diffusion using panel data from 28 developed countries and 26 developing countries in the world over the period 1999 to 2003. I utilize the differences in adoption of unbundling policies and cross ownership among countries to explore their influence on the growth rate in the number of broadband subscribers including DSL and cable modem. In this dissertation I present an econometric analysis that controls for economic, technological, demographic, and cultural factors that may influence broadband diffusion, and determines whether unbundling policies and cross ownership have an effect on broadband diffusion. Using an autoregression model, I analyze the nexus between these variables at a quantitative level.; Based on a pooled data set, my empirical results indicate that in developed countries unbundling policies are positively associated with DSL diffusion. The cross ownership, in developed countries, is positively associated with cable modem diffusion, but negatively associated with DSL diffusion. As a result, in developed countries where the incumbent carrier owns both platform but competes against independent entrants in DSL service market, it may drive DSL growth but appear to slow cable modem growth and may therefore hold back the overall broadband diffusion. The estimated results showed that in developed countries where the incumbent telecommunication carriers own both platforms, cable modem development might be given a low priority compared to DSL development due to potential competition from unbundling. The growth rate of broadband diffusion may be, therefore, greater in those countries where independent cable companies compete with telecommunication carriers.; However, it may be difficult to find the evidence that unbundling policies and cross ownership have effects on broadband diffusion in developing countries. Broadband diffusion in developing countries does not reveal the structure known from other telecommunication services. Since in developing countries broadband services are relatively new and there are still a small number of subscribers, it is not sure the policies have a significant effect on broadband diffusion.