Spillovers from Wiring Schools with Broadband: The Critical Role of Children

• Published in: Management science 2016-12, Vol.62 (12), p.3450-3471
• Main Authors: Belo, Rodrigo, Ferreira, Pedro, Telang, Rahul
• Format: Article
• Language: English
• Subjects: Analysis; Broadband; broadband in schools; Externalities (Economics); household Internet adoption; Households; Infrastructure; instrumental variables; Internet; Penetration; Portugal; Schools; Technology application; technology spillovers; Usefulness; Wireless Internet access
• ISSN: 0025-1909; 1526-5501
• DOI: 10.1287/mnsc.2015.2324

Providing broadband to schools can be an effective way to foster household Internet adoption in neighboring areas. On the one hand, the infrastructure put into place to meet schools’ needs can also serve households. On the other hand, students get acquainted with the Internet at school and signal its usefulness to adults at home who, consequently, can be more likely to adopt it. In this paper, we model the roles that broadband use at school and Internet adoption in neighboring households play in the decision to adopt the Internet at home and measure their effects empirically. We use data from Portugal between 2006 and 2009 on household Internet penetration and on how much schools use broadband. We use two different sets of instruments for the schools’ broadband use to alleviate endogeneity concerns. Both approaches yield similar results. We find that broadband use at school leads to higher levels of Internet penetration in neighboring households. Broadband use in schools was responsible for a year-over-year increase of 3.5 percentage points on Internet penetration in households with children. Across our data set this effect accounts for about 17% of the increase in home Internet adoption. We also find evidence of regional spillovers in Internet adoption across households. These were roughly responsible for an increase of 2.1 percentage points in Internet penetration or 38% of the total increase in household Internet penetration between 2006 and 2009. These results show that wiring schools with broadband is an effective policy to lower the barriers for Internet adoption at home and as such contributes to accelerating the pace of broadband diffusion. This paper was accepted by Lorin Hitt, information systems .