Coverage Area Expansion, Customer Switching, and Household Profiles in the Japanese Broadband Access Market (2008.5)

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CPDP- 34-E(PDF:409KB)	"Coverage Area Expansion, Customer Switching, and Household Profiles in the Japanese Broadband Access Market" (2008.5) Mitsuru SUNADA(Competition Policy Research Center, Japan Fair Trade Commission) Masato NOGUCHI(InfoCom Research, Inc.) Hiroshi OHASHI(Faculty of Economics, University of Tokyo) Yosuke OKADA(Graduate School of Economics, Hitotsubashi University, and CPRC) This paper examines diffusion process of internet broadband access in Japan by modeling the household choice behavior of broadband access modes, the choice set of which includes dial-up, integrated services digital networks (ISDN), cable television systems (CATV), asymmetric digital subscriber lines (ADSL), and optic fibers (fiber-to-the-home; FTTH). Estimates from random utility model of access demand reveal that characteristics of users, rather than those of access modes, play a significant role in demand substitution across the modes. Simulation exercises indicate that even if FTTH had been made available to the whole country in the year of 2005, merely about 11 percent of households would have switched to the mode. This result implies that inertia to existing access modes is considerably persistent and indirect network effects play an important role in the adoption of the new technology. Policy implications are also proposed. JEL classification codes: L10, L50, L96 Keywords: broadband access; coverage area; household profile; fiber-to-the-home (FTTH); simulation analysis

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Contents，Author

"Coverage Area Expansion, Customer Switching, and Household Profiles in the Japanese Broadband Access Market" (2008.5)
Mitsuru SUNADA(Competition Policy Research Center, Japan Fair Trade Commission)
Masato NOGUCHI(InfoCom Research, Inc.)
Hiroshi OHASHI(Faculty of Economics, University of Tokyo)
Yosuke OKADA(Graduate School of Economics, Hitotsubashi University, and CPRC)
This paper examines diffusion process of internet broadband access in Japan by modeling the household choice behavior of broadband access modes, the choice set of which includes dial-up, integrated services digital networks (ISDN), cable television systems (CATV), asymmetric digital subscriber lines (ADSL), and optic fibers (fiber-to-the-home; FTTH). Estimates from random utility model of access demand reveal that characteristics of users, rather than those of access modes, play a significant role in demand substitution across the modes. Simulation exercises indicate that even if FTTH had been made available to the whole country in the year of 2005, merely about 11 percent of households would have switched to the mode. This result implies that inertia to existing access modes is considerably persistent and indirect network effects play an important role in the adoption of the new technology. Policy implications are also proposed.
JEL classification codes: L10, L50, L96
Keywords: broadband access; coverage area; household profile; fiber-to-the-home (FTTH); simulation analysis