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Effectiveness and efficiency of state aid for new broadband networks: evidence from OECD member states

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  • Wolfgang Briglauer
  • Michał Grajek

Abstract

The deployment of new broadband networks (NBNs) based on fiber-optic transmission technologies promises high gains in terms of productivity and economic growth. It has attracted subsidies worth billions from governments worldwide through various state aid programs. Yet, such a program's effectiveness and efficiency still need to be studied. We employ panel data from 32 OECD countries from 2002 to 2019 to provide robust empirical evidence that state aid significantly increases NBNs by facilitating the deployment of new connections to 22 percentage points of households in the short term and 39.3 percentage points in the long term. We find it highly cost-efficient, as the programs break even after three years on average. We also discuss possible efficiency improvements in future funding programs, particularly requirements of technology neutrality, consideration of mobile broadband solutions, and integration of demand-side funding.

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  • Wolfgang Briglauer & Michał Grajek, 2024. "Effectiveness and efficiency of state aid for new broadband networks: evidence from OECD member states," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 33(5), pages 672-700, July.
    • Handle: RePEc:taf:ecinnt:v:33:y:2024:i:5:p:672-700
    DOI: 10.1080/10438599.2023.2222265
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    Cited by:

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    2. Marc Bourreau & Lukasz Grzybowski & Ángela Muñoz-Acevedo, 2023. "The Efficiency of State Aid for the Deployment of High-Speed Broadband: Evidence from the French Markets," CESifo Working Paper Series 10440, CESifo.
    3. Karlilar, Selin & Balcilar, Mehmet & Emir, Firat, 2023. "Environmental sustainability in the OECD: The power of digitalization, green innovation, renewable energy and financial development," Telecommunications Policy, Elsevier, vol. 47(6).

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    More about this item

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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