Measuring broadband in Europe: Development of a market model and performance index using structural equations modelling

Wolter Lemstra, Bart Voogt and Nicolai van Gorp

Telecommunications Policy, 2015, vol. 39, issue 3, 253-268

Abstract: This contribution reports on the development of a performance index and underlying market model with application to broadband developments in the European Union. The Structure–Conduct–Performance paradigm provides the theoretical grounding. Structural equations modelling was applied to determine the statistically significant factors and components in the path model. The data set was derived from public sources combined with a questionnaire completed by the national regulatory authorities. The data collection took place in the period May 2012–December 2012. In this contribution we focus on fixed broadband. The Broadband Performance Index resulting from the analysis consists of: the cumulative broadband uptake (across all technology platforms); the average monthly revenues per user; and the percentage of broadband households with a data rate above 10Mbit/s on the down link. The most important factor representing firm conduct and the main driver of broadband performance is the level of investment, which is in turn driven by GDP/capita. The factor best representing market structure is a modified Herfindal Hirschman Index (HHI*) capturing the platform-based competition (PSTN, CATV, FttH, and the market shares of access-based competitors). The HHI* is in turn driven by the wholesale price for unbundling and by the degree of urbanization. The resulting performance index values range from 73 to 121, with the EU average set at 100.

Keywords: Telecommunications; Performance; Measurement; Broadband; Structural equations modelling; European Union (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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DOI: 10.1016/j.telpol.2015.01.006

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