Promoting Consumer Migration to New Communications Technology: Does Regulation Affect the Digital Gap?

Abstract

This paper provides evidence on the migration of consumers from an “old” (copper-based) to a “new” (fiber-based) communications technology, taking specifically into account the impact of regulatory interventions imposed on the old technology. The analysis has been applied to a sample of EU25 countries using panel data from 2003 to 2014 on the adoption (i.e. the demand of subscriptions by households and firms), and take-up rate of ultra-fast broadband technology (i.e. the ratio between fiber subscribers - “homes connected” - to population covered with fiber connections - “homes passed”). Results show that an increase in the regulated price for accessing the existing old network favours consumer migration to the new technology. However, the access price to old technology negatively affects the take-up rate of the new technology. This implies that access regulation also positively affects broadband coverage but more than demand adoption. Hence, in order to raise broadband take-up rate, other instruments are needed to support ultra-fast broadband subscriptions.