What drives broadband diffusion? Evidence from Eastern Europe

Abstract

Recent studies stress the crucial role of broadband diffusion to enhance economic growth and performance. Therefore, the analysis of the factors shaping its diffusion becomes a matter of special importance. In this context, this article examines the impact of several socio-economic factors on the likelihood of broadband subscription, using a bivariate probit model, and making use of a unique data survey among Eastern European households. This is an area where broadband diffusion is just starting to take off and there is a lack of empirical evidence. In this context, a first interesting point is the fact that certain demographic variables (income and education) appear to be more correlated with Internet access as such than with the type of access. Moreover, the substantial differences in cross-country penetration rates are mainly explained by investments in information and communication technologies together with the level of competition in telecommunications markets.

Notes

¹ These costs are given by the price of a composite basket including both national fixed and mobile calls and international calls. We also tried several baskets of Internet access prices (with different levels of usage per month) but they were not significant.

² Although we do not report results here, the same happens with income.

Table 2 Estimated broadband equation joint with Home access Equation 3(3)