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Superfast broadband: is it really worth a subsidy?

Superfast broadband: is it really worth a subsidy? Purpose – Governments around the world are providing multi‐billion dollar subsidies to roll out fiber to the home (FTTH) to enable superfast broadband (50 Mbps and above). The premise for this is a belief that superfast broadband brings substantial economic and societal benefits. This paper's purpose is to examine whether this belief is well founded. Design/methodology/approach – The authors critically review the arguments most commonly made in favor of FTTH, examining their logic and underlying evidence. Findings – The paper finds that these arguments often inappropriately use benefits of basic broadband to make the case for the upgrade to superfast broadband, or use the benefits of providing superfast to business premises to argue for providing superfast to homes. The authors find the evidence that basic broadband brings economic growth is patchy, and that frequently studies that argue for a link do not adequately distinguish between correlation and causation. Originality/value – Thus the authors conclude that the conventional wisdom that FTTH will bring substantial economic and societal benefits and therefore deserves a subsidy is, at best, much overstated. The case has simply not been made that FTTH has sufficient incremental externalities over other forms of broadband. This is an important conclusion for politicians, policy makers, telecoms providers and taxpayers, and suggests that billions of dollars of public money may be being wasted. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png info Emerald Publishing

Superfast broadband: is it really worth a subsidy?

info , Volume 13 (4): 27 – Jun 28, 2011

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1463-6697
DOI
10.1108/14636691111146127
Publisher site
See Article on Publisher Site

Abstract

Purpose – Governments around the world are providing multi‐billion dollar subsidies to roll out fiber to the home (FTTH) to enable superfast broadband (50 Mbps and above). The premise for this is a belief that superfast broadband brings substantial economic and societal benefits. This paper's purpose is to examine whether this belief is well founded. Design/methodology/approach – The authors critically review the arguments most commonly made in favor of FTTH, examining their logic and underlying evidence. Findings – The paper finds that these arguments often inappropriately use benefits of basic broadband to make the case for the upgrade to superfast broadband, or use the benefits of providing superfast to business premises to argue for providing superfast to homes. The authors find the evidence that basic broadband brings economic growth is patchy, and that frequently studies that argue for a link do not adequately distinguish between correlation and causation. Originality/value – Thus the authors conclude that the conventional wisdom that FTTH will bring substantial economic and societal benefits and therefore deserves a subsidy is, at best, much overstated. The case has simply not been made that FTTH has sufficient incremental externalities over other forms of broadband. This is an important conclusion for politicians, policy makers, telecoms providers and taxpayers, and suggests that billions of dollars of public money may be being wasted.

Journal

infoEmerald Publishing

Published: Jun 28, 2011

Keywords: Fiber; Fiber to the home; Broadband networks; NGA; Subsidies; Externalities

References