Title page
Contents
Abstract 2
1. Introduction 4
2. Conceptual framework 7
2.1. Understanding SMCs and their impact on Internet access price 7
2.2. Testable hypotheses 10
3. Data and descriptive statistics 11
3.1. Price data 11
3.2. Interest variables 12
3.3. Control variables 14
3.4. Descriptive statistics 14
4. Estimation strategy 15
4.1. Reduced form econometric model 15
4.2. Causal identification strategy 16
5. Main results: Impact of international connectivity on Internet access price 16
5.1. General price effects of SMCs 17
5.2. Regional effects 18
6. The role of competition and regulation 19
6.1. Testing the competition channel 19
6.2. Heterogeneous effects of regulation 20
7. Robustness Checks 22
7.1. Potential endogeneity of SMC expansion 22
7.2. Addressing the heterogenous and dynamic effects of SMC arrivals 23
7.3. SMC arrival and BB prices 23
7.4. SMC arrival and market concentration 26
8. Conclusion 27
References 28
Appendix 31
A. Mobile Broadband Price and the Arrival of SMCs 31
B. Data 32
C. Two-Way Fixed Effects Estimation Results 35
D. Instrumental Variable Estimates 45
E. DiD estimation with staggered, inter-temporal, and multigroups treatment 46
Figure 1. A REPRESENTATION OF INTERNET INFRASTRUCTURE 8
Figure 2. THE SHORT-TERM IMPACT OF SMCS ON PRICE 10
Figure 3. COUNTRY-LEVEL TRENDS IN PRICES 12
Figure 4. INTERNATIONAL INTERNET BANDWIDTH PER USER, 2020 13
Figure 5. INTERNATIONAL CONNECTIVITY AND BROADBAND PRICE, 2013-2021 15
Figure 6. THE IMPACT OF INTERNATIONAL CONNECTIVITY EXPANSION ON BROADBAND PRICE 18
Figure 7. THE IMPACT OF INTERNATIONAL CONNECTIVITY EXPANSION ON BROADBAND PRICE - REGIONAL EFFECTS 19
Figure 8. THE IMPACT OF INTERNATIONAL CONNECTIVITY EXPANSION ON BROADBAND MARKET STRUCTURE 20
Figure 9. Impact of SMCs on broadband prices: Staggered DiD estimates 25
Figure 10. Impact of SMCs on market concentration: staggered DiD estimates 26
Figure 11. Impact of Major Submarine Cable Arrivals on Internet Access Prices 31
Figure 12. The impact of SMCs on fixed broadband price in Europe 37
Figure 13. Telecom operators' size and participation in SMCs 40
Figure 14. Number of treated countries across values of SMC treatment variables, fixed BB sample 46
Table 1. Sources and definition of the main variables 32
Table 2. Descriptive statistics 33
Table 3. Inoue-Solon Autocorrelation tests: Fixed Broadband 34
Table 4. Inoue-Solon Autocorrelation tests: Mobile Broadband 34
Table 5. International connectivity and fixed broadband price 35
Table 6. International connectivity and mobile broadband price 35
Table 7. List of countries by region 36
Table 8. International connectivity and fixed broadband price: Regional heterogeneity 37
Table 9. International connectivity and mobile broadband price: Regional heterogeneity 38
Table 10. International connectivity and fixed broadband market concentration 39
Table 11. International connectivity and mobile broadband market concentration 39
Table 12. Regulatory indicators and notations 40
Table 13. Marginal effects of international Internet bandwidth on fixed BB price depending on regulatory changes 41
Table 14. Marginal effects of international Internet bandwidth on fixed BB market HHI depending on regulatory changes 42
Table 15. Marginal effects of international Internet bandwidth on mobile BB price depending on regulatory changes 43
Table 16. Marginal effects of international Internet bandwidth on mobile BB market HHI depending on regulatory changes 44
Table 17. First-stage and second-stage IV results 45
Table 18. Dependent variable: Fixed BB price (log) 47
Table 19. Dependent variable: Fixed BB price (log). With regional non-parametric trends 47
Table 20. Dependent variable: Mobile BB price (log) 48
Table 21. Dependent variable: Fixed BB market's HHI 48
Table 22. Dependent variable: Mobile BB market's HHI 49