Stimulating broadband adoption: state-owned companies versus tax exemptions – the Brazilian case

Abstract

Purpose The purpose of this paper is to propose a new methodology to assess the economic and social impacts of policies to promote mass access to the internet in fixed broadband. The authors apply the methodology to the Brazilian broadband market. Design/methodology/approach For this purpose, municipal information concerning the provision of EILD is used, and then a stylized model of definition of service penetration based on information regarding the price, the distribution of income and the number of households served is proposed. Findings The results indicate that cost reduction policies are more effective than measures to promote competition through the introduction of state-owned enterprises in the telecommunication market for broadband service. On the other hand, the results also indicate that the federal and state governments face a dilemma between broadband policy and tax policy. Originality/value This is a new and original methodology to model the broadband market demand, which is useful to assess the impact of regulation policies in the sector as well as structural changes in that market.