Understanding Why Universal Service Obligations May Be Unnecessary: The Private Development of Local Internet Access Markets

Thomas Downes and Shane Greenstein

No 615, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: This study analyzes the geographic spread of commercial Internet Service Providers (ISPs), the leading suppliers of Internet access. The geographic spread of ISPs is a key consideration in U.S. policy for universal access. We examine the Fall of 1998, a time of minimal government subsidy, when inexpensive access was synonymous with a local telephone call to an ISP. Population size and location in a metropolitan statistical area were the single most important determinants of entry, but their effects on national, regional and local firms differed, especially on the margin. The thresholds for entry were remarkably low for local firms. Universal service in less densely-populated areas was largely a function of investment decisions by ISPs with local focus. There was little trace of the early imprint of government subsidies for Internet access at major U.S. universities.

Keywords: Internet; Universal service; Geographic diffusion; Telecommunications (search for similar items in EconPapers)
JEL-codes: L10 L86 L96 R11 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-geo, nep-net and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Understanding why universal service obligations may be unnecessary: The private development of local Internet access markets (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:tuf:tuftec:0615

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