Strategic choice and broadband divergence in the transition to next generation networks: Evidence from Canada and the U.S. (February 2018)

• Record Type: Journal Article
• Authors: Rajabiun, Reza; Middleton, Catherine
• Is Part Of: Telecommunications policy. Volume 42:Number 1(2018)
• Page Start: 37
• Page End: 50
• Publication Date: 2018-02
• Subjects: Broadband -- Innovation -- Creative destruction -- Strategy -- Technological change; Telecommunication -- Periodicals; Télécommunications -- Périodiques; 384
• DOI: 10.1016/j.telpol.2017.08.001
• Languages: English
• ISSNs: 0308-5961

Abstract

Abstract: This article investigates how infrastructure competition among broadband network infrastructure operators in Canada and the U.S. has influenced their incentives to increase fixed broadband connection speeds and invest in next generation fiber-to-the-premises (FTTP) technologies. The evolution of measured broadband speeds since the late 2000s documents growing differences in the incentives of dominant broadband operators to respond to demand for higher speed connectivity by increasing connectivity speeds they deliver to their customers. Dominant network operators in Canada have shown relatively stronger incentives than their counterparts in the U.S. to invest in and increase the capacity of legacy platforms. In the U.S. FTTP deployment incentives have been somewhat stronger, but network operators have been more reluctant to upgrade legacy technologies to deliver higher speeds. Diversity of strategic choices by large operators helps explain increasing regional and local broadband infrastructure gaps within the two countries. A high dividend payout financial strategy and increasing vertical integration appear to enhance the potential for overinvestment and inefficient duplication in legacy platforms by competing infrastructure providers. Highlights: Investigates operator incentives to increase fixed broadband speeds and invest in fiber-to-the-premises (FTTP) technologies. Using broadband speed measurements documents growing divergence of broadband capacity and service quality operators deliver. Explores how operators' strategic choices can help explain divergence in network quality in the transition to FTTP networks. Draws inferences for public policy to help stimulate the pace of creative destruction from old copper to new FTTP networks.