telecoms

Why national broadband plans work

July 12, 2013: 1:52 PM ET

The presence of a national strategy to increase broadband penetration is the most effective factor driving deployment, according to a study by the International Telecommunications Union.

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FORTUNE -- Despite the protestations of free-market purists (as if our communications networks operated in anything like a free market), it turns out that the countries with some kind of national broadband-deployment plan do better than those without. In fact, it's the main driver of increases in broadband penetration.

The International Telecommunications Union has issued a research report (PDF) indicating that of six major variables, the presence of a national broadband plan has the biggest effect on penetration, boosting it by an average of 2.5%.

MORE: A reorganized Microsoft looks a lot like Apple

Not to deny the impact of freer markets, another big factor is the relative absence of monopoly power. Moves away from monopoly and toward competition in the 10 years ending in 2011 increased the level of fixed broadband by about 1.4% in the 165 countries studied. (Many of today's free-market purists, of course, tend not to see monopoly as necessarily impinging on competition -- to them, only the government can do that.) Competition had a much huger effect on mobile broadband penetration, increasing it by 27%. The presence of national broadband plans increased mobile penetration by an average of 7.4%.

Other factors boosting deployment included: urbanization, income levels, investment, and regulation.

The Economist Intelligence Unit concluded that the study "suggests to regulators that maintaining a telecoms monopoly is a sure-fire way to hinder the march of broadband."

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