Journal of Regulatory Economics

, Volume 38, Issue 1, pp 70–85 | Cite as

An empirical study of broadband diffusion in rural America

Original Article


In this study we examine the factors that will encourage broadband adoption in rural areas. Using data on rural Incumbent Local Exchange Carriers (ILECs) we find that low density, high cost markets decrease the ability of the telecommunication service providers to offer DSL, but other factors also play a role. Demand for broadband has become more inelastic over time, marginal increases in speed alone have lost their appeal to customers, and the inclusion of video in a broadband package improves broadband take rates and willingness to pay. Small income elasticities reinforce our finding that broadband has become a necessity. Our analysis shows that price subsidies may not be effective in providing a large boost in demand, but policies that lower the cost of providing video may stimulate broadband adoption indirectly if the savings lead to more affordable bundled communications multimedia packages that users want.


DSL Demand Universal broadband Universal service Intercarrier compensation reform Rural America Elasticity Video 

JEL Classification

L51 L96 


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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.National Exchange Carrier Association, Inc.WhippanyUSA

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