The impact of regulation and competition on the adoption of fiber-based broadband services: recent evidence from the European union member states

Abstract

Although fibre-deployment of next generation access (NGA) broadband networks is considered as a decisive development for any information-based society, investment activities and especially the adoption of fiber-based broadband services take place only very gradually in most countries. This work identifies the most important determinants of NGA broadband adoption, using most recent panel data from the European Union member states (EU27) for the years from 2004 to 2012.The results show that stricter previous broadband access regulation has a negative impact on NGA adoption, while competitive pressure from mobile networks affects NGA adoption in a non-linear manner. It appears that the approach of strict cost-based access regulation embedded in the EU regulatory framework is at odds with the ambitious targets outlined in the European Commission´s "Digital Agenda". Finally, we find strong evidence for network effects underlying the NGA adoption process.[1]

Tariff diversity and competition policy: drivers for broadband adoption in the European Union

“…8 These findings challenge the viability of the existing regulatory framework. Currently it targets the effectiveness of wholesale broadband access regulation imposed on the incumbent's first generation network which, however, might impede the rollout of future ultra-fast networks (Briglauer, 2014;European Parliamentary Research Service, 2015). The second strand analyzes broadband retail prices and shows that data restrictions lead to lower prices and that increased quality, in terms of increased download-speed, drives prices upwards (Wallsten and Riso, 2010).…”

“…Ward and Woroch, 2010; Barth and Heimeshoff, 2014; Grzybowski and Verboven, 2016; Lange and Saric, 2016) and it has been shown that FMS even affects the broadband market. According to Briglauer (2014), FMS and NGA adoption follow an inverted U-shaped relationship. On the one hand, competition in the legacy market incentivizes investments to escape the competition and gain a firm position in the new frontier market, leading to a positive relationship ("escape competition effect").…”

“…Construction costs, mostly due to digging, are substantial for network providers and influence operators rollout and price setting. Following the line of argument in Briglauer (2014), the per capita costs of deployment and maintaining might be reduced with an increased number of connections in densely populated regions, but at the same time carrying out these works might be pricier in urban areas. Accounting for these counteracting forces, an interaction term urban*cost_cons is included, where varying costs of construction are captured by the construction price index.…”

“…Regarding Next Generation Access (NGA) networks, a recent study reveals that, for instance, in Germany only a small fraction of the deployed fibre infrastructure is actually used. 1 As a result, in recent years a large body of empirical literature emerged, carving out determinants of broadband adoption (Denni and Gruber, 2007; Gruber and Koutroumpis, 2013; Kongaut and Bohlin, 2014;Briglauer, 2014), but despite a general consensus that the price level plays an important role, neither the determinants of broadband internet access prices nor the resulting pricing structure came under increased scrutiny. However, both seem utterly important to be analyzed to ensure sound regulation and competition policy in this sector.…”

How to Fill the Digital Gap? The (Limited) Role of Regulation

“…There are very few papers that deal with NGN demand adoption (point (ii)). Wallsten and Hausladen (2009) Briglauer (2014) has investigated the determinants of NGN adoption for EU27 member states from 2004 to 2013. The author has found that the more effective the previous broadband access regulation was, the more negative the impact on adoption.…”