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Broadband Internet: Open Access and Content Competition

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  • Christiaan Hogendorn

    ()
    (Economics Department, Wesleyan University)

Abstract

Broadband “open access” regulation mandates openness of conduits (e.g. upgraded cable television) to service providers (e.g. America Online), but policy discussion often suggests that the ultimate goal is openness to advanced content (streaming video, interactive e-commerce, etc.). We define two forms of regulation, open access and common carriage, and discuss when they are equivalent. We argue that they are quite different in local access broadband. We develop a systems model with free entry and competition in all three industry segments (conduits, service providers, and content) and examine how open access regulation affects the number of firms in each. We confirm the view that an open access requirement can reduce entry of physical conduits, and more surprising we also describe conditions under which it can reduce the amount of content available to consumers.

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File URL: http://repec.wesleyan.edu/pdf/chogendorn/2004002_hogendorn.pdf
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Bibliographic Info

Paper provided by Wesleyan University, Department of Economics in its series Wesleyan Economics Working Papers with number 2004-002.

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Length: 28 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:wes:weswpa:2004-002

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Keywords: open access; broadband;

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References

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  1. Tasneem Chipty, 2001. "Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry," American Economic Review, American Economic Association, vol. 91(3), pages 428-453, June.
  2. Church, J. & Gandal, N., 1996. "Systems Competition, Vertical Merger and Foreclosure," Papers 6-96, Tel Aviv - the Sackler Institute of Economic Studies.
  3. Dos Santos Ferreira, Rodolphe & Thisse, Jacques-Francois, 1996. "Horizontal and vertical differentiation: The Launhardt model," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 485-506, June.
  4. N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
  5. Rubinfeld, Daniel L & Singer, Hal J, 2001. "Vertical Foreclosure in Broadband Access?," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 299-318, September.
  6. Gehrig, Thomas, 1998. "Competing markets," European Economic Review, Elsevier, vol. 42(2), pages 277-310, February.
  7. Byong-Duk Rhee, 1996. "Consumer Heterogeneity and Strategic Quality Decisions," Management Science, INFORMS, vol. 42(2), pages 157-172, February.
  8. Faulhaber, Gerald R & Hogendorn, Christiaan, 2000. "The Market Structure of Broadband Telecommunications," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 305-29, September.
  9. Church, Jeffrey & Gandal, Neil, 1992. "Network Effects, Software Provision, and Standardization," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 85-103, March.
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