  This article analyzes the role of Finnish regulation in achieving the
broadband penetration goals defined by the National Regulatory Authority. It is
well known that in the absence of regulatory mitigation the population density
has a positive effect on broadband diffusion. Hence, we measure the effect of
the population density on the determinants of broadband diffusion throughout
the postal codes of Finland via Geographically Weighted Regression. We suggest
that the main determinants of broadband diffusion and the population density
follow a spatial pattern that is either concentric with a weak/medium/strong
strength or non-concentric convex/concave. Based on 10 patterns, we argue that
the Finnish spectrum policy encouraged Mobile Network Operators to satisfy
ambitious Universal Service Obligations without the need for a Universal
Service Fund. Spectrum auctions facilitated infrastructure-based competition
via equitable spectrum allocation and coverage obligation delivery via low-fee
licenses. However, state subsidies for fiber deployment did not attract
investment from nationwide operators due to mobile preference. These subsidies
encouraged demand-driven investment, leading to the emergence of fiber consumer
cooperatives. To explain this emergence, we show that when population density
decreases, the level of mobile service quality decreases and community
commitment increases. Hence, we recommend regulators implementing market-driven
strategies for 5G to stimulate local investment. For example, by allocating the
3.5 GHz and higher bands partly through local light licensing.

General Economics;Economics