Broadband and Unbundling Regulations in OECD Countries

Abstract

Broadband penetration and available speeds vary widely across OECD countries. Policymakers around the world, and especially in countries like the U.S. that lag in the rankings, are searching for policies to narrow those gaps. Relatively little empirical work tests possible reasons for these differences. In this paper I test the impacts of regulations and demographics on broadband development in a panel dataset across countries. In addition to adding to the meager empirical literature on broadband across countries, this paper is novel in two ways. First, it explicitly takes into account the many different types of unbundling regulations that countries have implemented. Second, in addition to studying the impacts of policies on broadband penetration, it also studies the impact of policies on available connection speeds. Controlling for country and year fixed effects, I find that local loop unbundling has no robustly significant impact on broadband penetration. More extensive subloop unbundling, however, is negatively correlated with penetration. Requiring the incumbent to allow on-site collocation is positively correlated with penetration, though regulating collocation charges is negatively correlated with penetration. None of the unbundling regulations are correlated with connection speeds, though regulated collocation prices are generally negatively correlated with speed. In sum, it appears that very extensive unbundling mandates and some types of price regulation can reduce broadband investment incentives, though regulations ensuring easier interconnection with the incumbent can increase investment.