According to
a quantitative analysis conducted by Qmars
Safikhani, Danes are less responsive to
broadband price decreases than the Germans.
The analysis
based on broadband penetration is measured in the
number of subscribers per 100 inhabitants. Denmark
was selected with the highest broadband penetration
in Europe (29.3%); Germany was selected too as the
biggest broadband market in Europe with over 12.44
million broadband subscribers as of the second quarter
of 2006. Tariffs are uncapped and measured in Euro/Mbps,
VAT exclusive.
In order to
find the elasticity of broadband penetration with
respect to tariffs, a log linear model has been selected.
Based on the regression results, the elasticity of
broadband penetration with respect to tariffs in Denmark
and Germany are about -0.63% and -0.49% respectively;
suggesting that if in Denmark the broadband tariffs
decrease by 1%, on average, the broadband penetration
increases by about 0.63%. In Germany, on the other
hand, if the broadband tariffs decrease by 1%, on
average, the broadband penetration increases by about
3.49%.
Thus, in Germany,
people are more responsive to changes in broadband
tariffs than in Denmark.
The gap between
the level of awareness to price reduction in Denmark
and Germany could be explained by different reasons;
the higher broadband tariffs in Denmark costing €118/Mbps
against €57.4/Mbps in Germany at the starting
point of our data set (Q4 2003) could be one reason.
The lower broadband penetration in Germany (15.1%)
compared to Denmark (29.3%) at the end of second quarter
of 2006 could be another plausible reason to explain
different level of responsiveness in two countries.
Finally, another
interesting point to consider is the convergence of
tariffs in both countries. Based on the "European
broadband tariff benchmarks Q3 2006"
published by
Quantum-Web in November 2006, at the end of third
quarter of 2006, the cost of bandwidth in both countries
have leveled up to €42.5/Mbps.
For more information
about this press release or our tailored reports,
please contact us at
info@quantum-web.com
