|
Archive@NYU >
NET Institute >
NET Institute Working Papers Series >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/29852
|
| Title: | Broadband Openness Rules Are Fully Justified by Economic Research |
| Authors: | Economides, Nicholas - NYU Stern School of Business |
| Issue Date: | 2010 |
| Series/Report no.: | NET Institute Working Paper;10-02 |
| Abstract: | This paper responds to arguments made in filings in the FCC's broadband
openness proceeding (GN Dkt. 09-191) and incorporates data made
available since my January 14th filing in that proceeding. Newly
available data confirm that there is limited competition in the
broadband access marketplace. Contrary to some others' arguments,
wireless broadband access services are unlikely to act as effective
economic substitutes for wireline broadband access services (whether
offered by telephone companies or cable operators) and instead are
likely to act as a complement. Nor will competition in the Internet
backbone marketplace constrain broadband providers' behaviour in
providing "last mile" broadband access services. The last
mile, concentrated market structure, combined with high switching costs,
provides last mile broadband network providers with the ability to
engage in practices that will reduce social welfare in the absence of
open broadband rules. Furthermore, the effect of open broadband rules on
broadband provider revenues is likely to be small and can be either
positive or negative. Unfortunately, various filings have misstated or
mischaracterized the results on the economics of two-sided markets.
Contrary to what some have argued, allowing broadband providers to
charge third party content providers will not necessarily result in
lower prices being charged to residential Internet subscribers. This is
true under a robust set of assumptions. Despite some parties'
mischaracterization of the economic literature, price discrimination by
broadband providers against third party applications and content
providers will reduce societal welfare for numerous reasons. This
reduction in societal welfare is especially acute when price
discrimination is taken to the extreme of exclusive dealing between
broadband providers and content providers. Antitrust and consumer
protection laws are insufficient to protect societal welfare in the
absence of open broadband rules. |
| URI: | http://hdl.handle.net/2451/29852 |
| Appears in Collections: | NET Institute Working Papers Series
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
