The Transformation of Broadband Demand: From Discretionary Service to Essential Infrastructure (2010--2024)

Samir Orujov, Ilgar Ismayilov and Jeyhun Huseynzade
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Samir Orujov: UBS - Université de Bretagne Sud, ADA University, Baku, Azerbaijan., Information Communication Technologies Agency
Ilgar Ismayilov: Information Communication Technoogies Agency
Jeyhun Huseynzade: Information Communication Technologies Agency

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Abstract: Has broadband become a necessity good immune to price changes? Using a 15-year panel of 33 European countries (2010--2024) and two-way fixed effects with Driscoll--Kraay standard errors, we document a fundamental transformation in broadband demand. Pre-COVID, Eastern Partnership countries exhibited highly elastic demand ($\varepsilon = -0.61$, p$<$0.001)---a 10\% price reduction increased subscriptions by 6\%---while EU countries showed moderate elasticity ($\varepsilon = -0.12$, p$<$0.05). By 2020--2024, both regions converged to near-zero elasticity, with price changes having no detectable effect on adoption. Crucially, placebo tests reveal this transformation began in 2015, not 2020, indicating a decade-long digital integration process rather than a COVID-19 shock. We further demonstrate that price measurement critically affects inference: income-relative prices (as \% of GNI) yield significant results in 100\% of specifications, compared to only 25\% for PPP-adjusted prices. These findings have immediate policy relevance: as broadband transitions from discretionary service to essential utility, policy emphasis must shift from affordability subsidies to universal infrastructure deployment.

Date: 2025-12-18
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