Six years ago, the Phoenix Center released (and later published) a paper entitled Network Neutrality and Foreclosing Market Exchange: A Transaction Cost Analysis. In that paper, we analyzed the effects of network neutrality proposals that foreclose or severely limit market transactions between content providers and broadband service providers. Our model revealed that under plausible conditions, rules that prohibit efficient commercial transactions between content and broadband service providers could, in fact, be bad for all participants: consumers would pay higher prices, the profits of the broadband service provider would decline, and the sales of Internet content providers would also decline. As a result, such proposals would …
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FCC Rules Block Broadband Price Cuts…
May 13th, 2013 | Posted by in Federal Communications Commission | Law and Economics | Net Neutrality | Regulation | Wireless - (0 Comments)The FCC Contradicts Their Facts (Again) To Justify Expanded Broadband Regulation…
February 20th, 2013 | Posted by in Federal Communications Commission | IP Transition | Law and Economics | National Broadband Plan | Net Neutrality | Regulation | Section 706 - (1 Comments)Last year, we released a paper entitled Justifying the Ends: Section 706 and the Regulation of Broadband (and forthcoming, Journal of Internet Law) where we demonstrated how the Federal Communications Commission deliberately ignored its own evidence to support expanded regulatory jurisdiction over IP-based services. With the release of its new Measuring Broadband America Report last week, the FCC once again undermines its factual predicate for Internet regulation. Let me explain. Over the last several years, we have seen the Federal Communications Commission put forth a rather clever argument to expand its regulatory authority over broadband services. Under Section 706(a) of the Communications Act, the Commission …
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Looking Ahead to 2013…
January 11th, 2013 | Posted by in Broadband | Federal Communications Commission | Incentive Auctions | IP Transition | Net Neutrality | Regulation - (1 Comments)Over the course of the last several weeks, we at the Phoenix Center held Part I and Part II of our Annual U.S. Telecoms Symposium. Part I, held on December 6th, focused on the impact of the recent election on U.S. broadband policy; while the more “wonky” Part II, held last week on January 3rd, focused on emerging issues in broadband policy for 2013. As always, we had a fantastic array of speakers at both events, and the presentations were excellent. While interested folks are welcome to watch the video of the full proceedings on-line (Part I may be viewed here; while Part II may …
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Economic Theory in Action: The FCC’s Assault on the Mobile Broadband Consumer…
November 30th, 2012 | Posted by in "Over the Top" Services | Broadband | Federal Communications Commission | Industry Structure and Market Performance | Law and Economics | MVPDs | Net Neutrality | Network Agnostic Devices | Regulation | Wireless - (Comments Off)Recently, I spotted an interesting blog by Scott Wallsten at the Technology Policy Institute. In this blog, Scott discusses the FCC’s recent decision that Verizon violated the open access rules of the 700 MHz C-Block auction by charging its customers an additional $20 per month on its data plans to tether a device. In response, Verizon paid a fine and now allows tethering on all new data plans. However, Scott observes that: Verizon effectively abandoned the post-paid market for light users after the FCC decision. Verizon no longer offers individual plans. Even consumers with only a single smartphone must purchase a shared data plan. That’s …
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Professor Susan Crawford and the Looming “Cable Monopoly”…
November 16th, 2012 | Posted by in "Over the Top" Services | AllVid | Broadband | Broadband Credibility Gap | Cable | CableCard | Federal Communications Commission | Industry Structure and Market Performance | Investment | IP Transition | Law and Economics | MVPDs | National Broadband Plan | Net Neutrality | Regulation | Susan Crawford - (Comments Off)Next month, a new book entitled Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age (Yale University Press 2012) from Cardozo Law School Professor Susan Crawford will hit the bookshelves. According to her publisher’s blurb, Professor Crawford’s book will examine how the United States has “created the biggest monopoly since the breakup of Standard Oil a century ago.” But what is this “monopoly” to which Professor Crawford refers? While the publisher’s promotional blurb is silent on this question, according to a 2010 paper authored by Professor Crawford in the Yale Law and Policy Review, it appears that she is talking about …
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George and Larry’s Excellent Peruvian Broadband Adventure…
November 9th, 2012 | Posted by in Broadband | Federal Communications Commission | International | Law and Economics | Net Neutrality | Regulation | Regulatory Reform | Spectrum - (Comments Off)Last week, George and I returned from an amazing trip to Peru where we held two days of workshops with OSIPTEL—the Peruvian telecoms regulator—as part of a project for USAID. As we covered a wide range of topics, we were once again reminded that while language and individual political nuances among various countries may differ, the fundamental economics—and concurrent complex policy issues—facing telecom regulators remain universal. That is, how do we get more broadband deployed when it isn’t necessarily profitable to do so? In light of this universal question, we spent a significant amount of time talking about the economics of the “last mile” and …
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Susan Crawford and the Economics of the Wireless Industry…
August 10th, 2012 | Posted by in "Over the Top" Services | Federal Communications Commission | Incentive Auctions | Incumbent Exclusion Rules | Industry Structure and Market Performance | Law and Economics | Mobile Broadband | Net Neutrality | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Susan Crawford | Wireless - (Comments Off)Last week, Professor Susan Crawford authored an op-ed entitled What’s Good for Verizon and AT&T Is Terrible for American Consumers. While Professor Crawford’s emotional argument is a bit scattered, her depiction of an industry in transition provides a useful foundation for discussing the future of broadband in the United States. First, Professor Crawford argues that wireless broadband is a “commodity,” and one that consumers are increasingly using as a substitute for traditional “voice” and “texting” services. This substitution is arguably true and, as such, we should therefore expect to see broadband providers increasingly employing and experimenting with a variety of pricing plans in an effort …
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Julius Genachowski’s Speech at CTIA…
May 22nd, 2012 | Posted by in Broadband Credibility Gap | Data Roaming | Federal Communications Commission | Incentive Auctions | Incumbent Exclusion Rules | Industry Structure and Market Performance | Interoperability | Law and Economics | Merger Review | Mobile Broadband | Net Neutrality | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Wireless - (Comments Off)In his recent keynote speech at the CTIA show in New Orleans, Federal Communications Commission Chairman Julius Genachowski reiterated his (and the industry’s) concern that the “demand for mobile services is on pace to exceed the capacity of our mobile networks” and, therefore, we must “tackle the capacity challenge.” The Chairman has previously foretold of a future where spectrum exhaust could make “consumers [...] face slower speeds, more dropped connections, and higher prices.” Plainly, spectrum exhaust remains a key challenge for both mobile service providers and policymakers. The Chairman also took the chance in his CTIA speech to challenge what we and others have said …
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What is the Effect of Regulation on Investment?
May 8th, 2012 | Posted by in "Over the Top" Services | AllVid | Broadband Credibility Gap | Data Roaming | Employment | Federal Communications Commission | Industry Structure and Market Performance | Interoperability | Investment | Jobs | Law and Economics | Net Neutrality | Regulation | Regulatory Reform | Set-top Boxes | Spectrum | Spectrum Caps | Wireless - (Comments Off)What is the effect of regulation on investment? At a high level of abstraction, it is impossible to say. Rate-of-return regulation, for example, is criticized by economists for possibly encouraging too much investment—a principle known as the Averch-Johnson Effect. On the other hand, if a firm fears that the regulator will alter the rules in a way that reduces the ability to earn profits on large, long-term capital investments, then the incentive to make such investments is reduced. Importantly, the issue is not, as some claim, just about “regulatory uncertainty.” There could be great uncertainty about future rule changes, but if the expectation is that …
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Should Content Providers be Allowed to Contribute to the Cost of Mobile Bandwidth?
March 2nd, 2012 | Posted by in "Over the Top" Services | Federal Communications Commission | Mobile Broadband | Net Neutrality | Network Agnostic Devices | Spectrum | Spectrum Caps | Spectrum Exhaust | Wireless - (Comments Off)A recent article in the Wall Street Journal caught my attention, and I’m sure the attention of many others. The article—AT&T May Try Billing App Makers (February 28, 2012)—reported that AT&T and content providers were discussing ways in which the providers of mobile content, like video streaming, could pay for (in whole or part) the cost of the data traffic on behalf of the end user. According to the article, the interest in a content-payer system is being encouraged by content developers that “could use the feature to drum up new business from customers wary of using data-heavy services like mobile video” in a world …
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