Catching up in broadband regressions: does local loop unbundling really lead to material increases in OECD broadband uptake?
Local loop unbundling has been widely promulgated by policy-makers as a significant factor stimulating broadband uptake and therefore an essential component of a developing ‘information economy’. Whilst empirical evidence on this issue is sparse, one recent study commissioned and published by the OECD (OECD, 2007) does find a statistically significant effect of unbundling on broadband uptake. On closer examination however, the economic magnitude of this effect is trivial. Moreover, once the error structure of the data is properly accounted for, the statistical significance disappears. As a result, the OECD report cannot be used to justify the view that local loop unbundling leads to greater broadband uptake.