Submarine cables enable international connectivity and are essential for high-speed internet access. This paper tests their potential to improve the affordability of internet access by supporting a price drop through cost savings or increased competition intensity. The empirical framework relies on a dataset that combines the capacity of submarine cables with price data on fixed and mobile internet across 150 countries over a decade. Using a two-way fixed effects estimator, the analysis finds that the expansion of submarine cables is associated with a statistically significant drop in the price of internet access, up to 14–21 percent, depending on the technology, for every doubling of the capacity of submarine cables, and with large regional disparities. These effects stem from cost savings in the short run and tend to decline over time, concomitant with a rise in domestic telecom market concentration. The analysis also finds that these effects can be enhanced by telecom regulations, especially de-jure independence of the regulator, and the regulation of network interconnection and access, shared telecom infrastructure, and competition from international players across the broadband value chain. The main findings are robust to alternative estimation strategies, including an instrumental variable and a staggered difference in differences.
Authors
Cariolle, Joël, Houngbonon, Georges Vivien, Silue, Tarna, Strusani, Davide
- Citation
- “ Cariolle, Joël ; Houngbonon, Georges Vivien ; Silue, Tarna ; Strusani, Davide . 2024 . The Impact of Submarine Cables on Internet Access Price, and the Role of Competition and Regulation . Policy Research Working Paper; 10840 . © Washington, DC: World Bank . http://hdl.handle.net/10986/41874 License: CC BY 3.0 IGO . ”
- Collection(s)
- Policy Research Working Papers
- DOI
- http://dx.doi.org/10.1596/1813-9450-10840
- Identifier externaldocumentum
- 34362367
- Identifier internaldocumentum
- 34362367
- Pages
- 49
- Published in
- United States of America
- RelationisPartofseries
- Policy Research Working Paper; 10840
- Report
- WPS10840
- Rights
- CC BY 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by/3.0/igo/
- UNIT
- IFC
- URI
- https://hdl.handle.net/10986/41874
- date disclosure
- 2024-07-16
- region geographical
- World
Files
Table of Contents
- Introduction 4
- Conceptual framework 7
- Understanding SMCs and their impact on Internet access price 7
- Testable hypotheses 10
- Data and descriptive statistics 11
- Price data 11
- Interest variables 12
- International connectivity 12
- Competition intensity and regulatory framework 13
- Control variables 14
- Quality and availability of connectivity 14
- Market size variables 14
- Descriptive statistics 14
- Estimation strategy 15
- Reduced form econometric model 15
- Causal identification strategy 16
- Main results: Impact of international connectivity on Internet access price 16
- General price effects of SMCs 17
- Regional effects 18
- The role of competition and regulation 19
- Testing the competition channel 19
- Heterogeneous effects of regulation 20
- Robustness Checks 22
- Potential endogeneity of SMC expansion 22
- Addressing the heterogenous and dynamic effects of SMC arrivals 23
- SMC arrival and BB prices 23
- SMC arrival and market concentration 26
- Conclusion 27
- Mobile Broadband Price and the Arrival of SMCs 31
- Data 32
- Two-Way Fixed Effects Estimation Results 35
- Instrumental Variable Estimates 45
- DiD estimation with staggered, inter-temporal, and multi-groups treatment 46
- SMC arrival and BB prices, detailed staggered DiD estimates 47
- SMC arrival and market structure, detailed staggered DiD estimates 48
