Identifying the Determinants of Broadband Adoption by Diffusion Stages in OECD Countries

Abstract

Governments worldwide actively promote broadband development, owing to its positive impact on economic growth. Although many studies have identified the determinants of broadband adoption, this study re-examines the determinants by applying Arellano–Bond GMM dynamic panel data estimation with more complete panel data for OECD countries. The estimation can not only closely capture the dynamics of broadband diffusion but also solve an endogeneity problem existing in the estimations of previous studies. The estimation results indicate that content is also a significant factor, in addition to previous broadband penetration and platform competition, as commonly identified in previous studies. This study further examines and compares determinants in different stages segmented by adopter categories proposed by Rogers. The results reveal different determinants in different stages. The key determinants are income, education, and content in the innovator and early adopter stage; platform competition and previous broadband penetration in the early majority stage; and broadband price in the late majority and laggard stage. Governments should thus devise and implement appropriate strategies for the major potential adopters in each stage instead of adopting a one-size-fits-all strategy. The results of this study provide a valuable reference for countries in early stages of broadband development or for those planning or reviewing their strategies.