The Impact of Submarine Cables on Internet Access Price, and the Role of Competition and Regulation

Joël Cariolle (), Georges Houngbonon (), Tarna Silue () and Davide Strusani ()
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Joël Cariolle: FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne
Georges Houngbonon: IFC - International Finance Corporation
Tarna Silue: IFC - International Finance Corporation
Davide Strusani: IFC - International Finance Corporation

Working Papers from HAL

Abstract: Submarine cables enable international connectivity and are essential for high-speed internet access. This paper tests their potential to improve the affordability of internet access by supporting a price drop through cost savings or increased competition intensity. The empirical framework relies on a dataset that combines the capacity of submarine cables with price data on fixed and mobile internet across 150 countries over a decade. Using a two-way fixed effects estimator, the analysis finds that the expansion of submarine cables is associated with a statistically significant drop in the price of internet access, up to 14–21 percent, depending on the technology, for every doubling of the capacity of submarine cables, and with large regional disparities. These effects stem from cost savings in the short run and tend to decline over time, concomitant with a rise in domestic telecom market concentration. The analysis also finds that these effects can be enhanced by telecom regulations, especially de-jure independence of the regulator, and the regulation of network interconnection and access, shared telecom infrastructure, and competition from international players across the broadband value chain. The main findings are robust to alternative estimation strategies, including an instrumental variable and a staggered difference in differences.

Keywords: Digital Economy; Submarine Cable; Internet price; Competition; Regulations (search for similar items in EconPapers)
Date: 2024-09-30
Note: View the original document on HAL open archive server: https://hal.science/hal-04643760v1
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