Who’s Superconnected and Who’s Not? Investment in the UK’s Information and Communication Technologies (ICT) Infrastructure

Abstract

The Information and Communication Technologies (ICT) infrastructure sector has dramatically expanded over the past decade as the demand for increased digital connectivity has increased from both companies and consumers. Broadband investment has been increasingly associated with positive economic growth and digital connectivity is seen as an essential ingredient with which to increase productivity, employment and create new enterprises. Hence, there is concern that companies and consumers in particular locations are disadvantaged if they are unable to obtain sufficient connectivity. At the present time there has been limited analysis of where new investment has taken place, why it has taken place in specific locations, and what the key economic and socio-economic drivers have been influencing this. The role of regulation in this process is also important to understand. This article draws on two unique, uncensored infrastructure datasets from the UK’s telecommunications regulator Ofcom to assess the factors driving investment in fixed and mobile ICT infrastructure. The fixed infrastructure model utilised modem sync speed measurements from over 20 million premises, aggregated to 7004 Middle Super Output Areas (MSOA) (97.3 %) in England and Wales, to provide comprehensive micro-geographic analysis for the first time. The mobile model employed the average data transfer per premises as a network capacity-demand metric for 173 counties and Unitary Local Authorities (ULAs) (98.3 %) in England, Scotland and Wales. Using predictors at a range of spatial scales, multilevel modelling utilising Markov Chain Monte Carlo (MCMC) methods was used to estimate both the fixed and mobile broadband infrastructure models. The results confirm many of the prevailing postulates of existing telecommunications theory, namely, that dense, wealthy and well-educated areas are attractive investment hotbeds for telecommunication technologies. In the UK’s fixed ICT infrastructure market, inter-platform competition was found to have a positive impact on investment compared to the mixed results found for intra-platform competition. On the whole, telecommunication investment in the UK appears to be driven by the same drivers as the much documented U.S. case, but further spatially granular research needs to be undertaken to examine the market dynamics between the incumbent and different forms of induced competition across the telecommunication network.