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Entry threats from municipal broadband Internet and impacts on private provider quality

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  • Landgraf, Steven W.

Abstract

Deploying municipally-run broadband Internet to deliver high-speed access is an increasingly popular idea among local communities. These public networks often operate alongside private incumbent networks and may have substantial effects on the competitive landscape. This research design exploits variation in cities that have a municipal electric utility (MEU), which reduces barriers to entry for municipal providers, and state-level regulation, which restricts public entry into broadband markets. Using these market differences, I investigate whether incumbents offer higher speeds to deter public entry or underinvest in speed due to crowding out. Estimates indicate that the presence of an MEU is associated with lower maximum upload and download speeds offered by private cable and DSL providers. In states where municipal entry is made more difficult by regulation, these effects disappear. Therefore, restrictive regulation of municipal broadband has a non-trivial effect on competition. Negative effects are reduced in communities with lower or less dense populations.

Suggested Citation

  • Landgraf, Steven W., 2020. "Entry threats from municipal broadband Internet and impacts on private provider quality," Information Economics and Policy, Elsevier, vol. 52(C).
  • Handle: RePEc:eee:iepoli:v:52:y:2020:i:c:s0167624520301220
    DOI: 10.1016/j.infoecopol.2020.100878
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    More about this item

    Keywords

    Internet; Broadband; Municipal; Regulation; Crowding out; Competition;
    All these keywords.

    JEL classification:

    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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