Policy, Federalism, and Regulating Broadband Internet Access

Following recent telecommunications mergers, local (mostly municipal and county) governments and the federal government are fighting over who should determine whether cable television systems must make their facilities available to unaffiliated providers of high-speed ("broadband") Internet service. This intergovernmental dispute is only the latest in a series of such clashes regarding competition and communications policy. A brief review of the policy suggests that substantively, local open-access requirements are not yet warranted. However, the economics of federalism, primarily that the relevant markets are local, indicates that local governments should have the right to choose these policies, perhaps erroneously. Federal preemption could prevent learning from multiple independent local "experiments." The best case for limiting local authority is if it is only the exploitation of opportunistic ability to extract nationwide rents in exchange for approving transfer of the incumbent's cable franchise to an acquiring firm.