Go for gigabit? First evidence on economic benefits of (ultra-)fast broadband technologies in Europe

Wolfgang Briglauer and Klaus Gugler

No 18-020, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: The literature on the effects of telecommunications infrastructure investments find positive macroeconomic effects, however, it is severely constrained because it could hitherto only analyze investment up to "basic" broadband but not up to the newer generations of "fast" and "ultra-fast" broadband; in particular there is no such evidence available at the EU level so far. Utilizing a comprehensive panel dataset of EU27 member states for the period from 2003-2015, we estimate a small but significant effect of fiber-based ultra-fast broadband over and above the effects of basic broadband on GDP. Adoption of hybrid-fiber fast broadband is incrementally to basic broadband insignificant. Our cost-benefit analysis implies that policy intervention - as foreseen by the European Commission in its public policy targets - is only justified for coverage and adoption levels of around 50% of fast or ultra-fast broadband, whereas for 100% coverage levels we find net losses to society. Thus, it appears that - for the time being and according to the policy principle of "technological neutrality" - a combination of basic broadband, fast and ultra-fast broadband entails the largest economic net benefits to society.

Keywords: new broadband networks; broadband speed; economic growth; EU-panel data (search for similar items in EconPapers)
JEL-codes: L96 O47 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-eur and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: Go for Gigabit? First Evidence on Economic Benefits of (Ultra-)Fast Broadband Technologies in Europe (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:18020

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