An assessment of Mobile Broadband Access in Indonesia: a Demand or Supply Problem?

Previous studies conclude that broadband plays an important role in stimulating economic growth by generating new employment, and improving access to health and education. However, most of these analyses are conducted for developed countries, with little attention being paid to developing countries. This study aims to find out which factors should be considered, following the assertion by the ITU (2010) that broadband, especially mobile broadband, should be developed further to narrow the gap between developed and developing countries. Moreover, this study questions whether the digital gap in broadband access is merely a demand or supply problem. The demand side is represented by income level, which is closely related to affordability issues, while the supply side is indicated by the impact of different geographical characteristics which shows the different stage of infrastructure development. To operationalize this aim, a Probit regression models the decision to subscribe to mobile broadband as a function of income and geographical area, as well as other control variables. The results indicate that income is less important than geographical area in explaining mobile broadband access. The study proposes that the supply -side factor related to infrastructure development should be prioritized as the focus of broadband policy in the short term