Regulation and the Deployment of Broadband

This study examines the impact of telecommunications regulatory policy on broadband service deployment. Using U.S. data covering all forms of access technology (chiefly DSL and cable modem) and all areas served by major carriers, we investigate the impact of state and federal regulation on broadband availability. Alternative regulation increases the probability of broadband availability, particularly for price caps. Unbundled network element (UNE) rates, the prices incumbent carriers charge to competitors for access to the local exchange network, also matter. Areas with lower UNE rates have a slightly higher probability of broadband availability. The effects of UNE rates on broadband deployment are largest where incentive regulation is in place. Our objective in examining regulatory factors is to highlight the role of incentive regulation and local telecommunications competition policy—policies used or available around the world—in stimulating broadband service deployment.