The Diffusion of High Speed Broadband : A Cross Country Analysis

This research analyses the adoption of very high speed broadband (e.g. fiber to the home) and provides diffusion forecasts (i.e. yearly changes in subscription) for countries across the world. We present econometric models which estimate the diffusion rate according to a set of supply and demand characteristics. Based on data for 25 countries for the period of 1999-2009 we show that the demand- and supply-side factors such as income, monthly subscription price, and competition in broadband and television can explain 75% of the variance in the observed yearly change in subscription. Based on the econometric results we use a discrete form of the Logistic diffusion function and estimate the diffusion rate according to the above factors. We find that a country-specific diffusion model can substantially improve the forecast accuracy. Based on country specific models we show that 50% of households in most of the countries in Central and Eastern Europe will adopt high speed broadband through fiber to the home/building (i.e. FTTx) technology by 2015-2016. In contrast, we find that adoption rate in most countries in Western Europe is much slower and 50% of households will adopt FTTx broadband only after 2020