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Rural Broadband and the Unrecovered Cost of Streaming Video Entertainment

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  • Layton, Roslyn
  • Potgieter, Petrus

Abstract

The paper described the challenge of provision of rural broadband provision by examining the economics of 4 fiber to the home networks in different parts of the US. It shows how streaming video entertainment is the largest and growing category of traffic and which puts unique demands on the network. The paper described the history, policy, and economics of traditional end user pricing models flat, and uniform (over service area) based on speed tiers, and their shortcomings to support continued investment. It introduced the notion of the Big Streamers, the five largest video streaming providers and their content distribution practices. The document also reviewed the components of a rural broadband network. It reviewed traffic data from the networks, calculated revenue and cost, defined amounts of overage, and projected future shortfalls. This analysis demonstrates that rural networks are heavily burdened by huge volumes of streaming content which is turned into revenue not by the broadband providers but by the Big Streamers. The policy solutions section introduced the three types of response and their implications. The current model of flat and uniform (over service area) pricing (even with subsidy) is likely to become unsustainable for rural broadband provision. The paper contributes to the ongoing policy discussion of rural broadband and closing the digital divide.

Suggested Citation

  • Layton, Roslyn & Potgieter, Petrus, 2021. "Rural Broadband and the Unrecovered Cost of Streaming Video Entertainment," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238035, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itsb21:238035
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    File URL: https://www.econstor.eu/bitstream/10419/238035/1/Layton-Potgieter.pdf
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    References listed on IDEAS

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    1. Haucap, Justus & Heimeshoff, Ulrich & Lange, Mirjam R.J., 2016. "The impact of tariff diversity on broadband penetration—An empirical analysis," Telecommunications Policy, Elsevier, vol. 40(8), pages 743-754.
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    3. Howell, Bronwyn, 2010. "Flat-rate Tariffs and Competitive Entry in Telecommunications Markets," Working Paper Series 4057, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    4. Lehr, William & Sicker, Douglas, 2016. "Would you like your Internet with or without video?," 27th European Regional ITS Conference, Cambridge (UK) 2016 148683, International Telecommunications Society (ITS).
    5. Howell, Bronwyn, 2010. "Flat-Rate Tariffs and Competitive Entry in Telecommunications Markets," Working Paper Series 4053, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    6. Boik, Andre & Greenstein, Shane & Prince, Jeffrey, 2019. "The persistence of broadband user behavior: Implications for universal service and competition policy," Telecommunications Policy, Elsevier, vol. 43(8), pages 1-1.
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    Cited by:

    1. Madlener, Reinhard & Sheykhha, Siamak & Briglauer, Wolfgang, 2022. "The electricity- and CO2-saving potentials offered by regulation of European video-streaming services," Energy Policy, Elsevier, vol. 161(C).
    2. Klein, Gordon J., 2022. "Fiber-broadband-internet and its regional impact—An empirical investigation," Telecommunications Policy, Elsevier, vol. 46(5).

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