Impact evaluation of broadband investment on coverage and household internet use in rural areas

This work simultaneously evaluates the impact of investment on broadband coverage in rural areas and whether having better broadband coverage affects household internet use by analyzing variables such as the use of electronic commerce, employment opportunities, and interactions with the public administration, among others. We use panel data of Spanish municipalities with 100 Mb coverage and broadband investment information for the period 2013-2019 provided by the Ministry of Economic Affairs and Digital Transformation (MEADT), a survey on household internet use from the Spanish Statistical Institute, and other public databases. Our methodological approach combines the difference-in-differences method, Inverse Probability Weight (IPW), and the Instrumental Variable technique. The estimated reduced form is a second-best approach motivated by the lack of data on adoption. The initial results show a rural digital divide in Spain, with significant differences between urban areas (90% coverage) and rural areas (38%). The impact evaluation shows that rural municipalities that have made use of broadband investment subsidies notably increase their 100 Mb coverage compared to similar municipalities that have not used this subsidies. Regarding the effect of better coverage on household internet use, the results indicate that high-speed coverage in rural areas does not significantly influence household internet use in these areas.