Factors affecting the availability of broadband access to the Internet: Costs, demographics, infrastructure, wire center type, and regulatory issues

The main purpose of this thesis is to investigate the factors affecting the availability of broadband access to the Internet in the context of economics and regulation. Based on simple economic theories of supply and demand, I estimate logistic regressions for the availability of Internet services via DSL (Digital Subscriber Line) and cable modem technologies. The explanatory variables include costs, demographics, existing infrastructure, and wire center type. The results have important implications for policy-making and provide interesting insights on the provider's decision to deploy advanced communications technologies.;Using data on availability collected in February of 2000, I find that the percent of population in urbanized area has a significant positive effect on the probability of a wire center area having DSL or cable modem services. I also find evidence suggesting that T1 charges for connecting to an Internet backbone could materially discourage the deployment of these technologies. RBOC ownership of a given wire center does not have any significant effect on the availability of DSL and cable modem services. This indicates that customers served by Regional Bell Operating Companies (RBOCs), all else being equal, have the same opportunity to subscribe to high-speed Internet service as customers served by non-RBOCs. Median household income, which measures the ability to pay of the market area covered by a wire center, is found to have a significant positive impact on broadband deployment. As for the other demographic factors, such as age, race, and education, I could not obtain any significant result in the different specifications.;Having identified some key factors that determine the deployment of broadband Internet technology, I conclude that although cable modern and DSL services are becoming available faster in some areas than in others, the deployment process is still at its nascent stage, and market forces may soon spread these new services to other areas. I recommend that the FCC continues its data-gathering efforts to track the speed and the extent of broadband deployment, but to hold off on any plans to intervene in the market.