Local Broadband Access: Primum Non Nocere or Primum Processi - A Property Rights Approach

High-speed or "broadband" Internet access currently is provided, at the local level, chiefly by cable television and telephone companies, often in competition with each other. Wireless and satellite providers have a small but growing share of this business. An influential coalition of economic interests and academics have proposed that local broadband Internet access providers be prohibited from restricting access to their systems by upstream suppliers of Internet services. A recent term for this proposal is "net neutrality." We examine the potential costs and benefits of such a policy from an economic welfare perspective. Using a property rights approach, we ask whether transactions costs in the market for access rights are likely to be significant, and if so, whether owners of physical local broadband platforms are likely to be more or less efficient holders of access rights than Internet content providers. We conclude that transactions costs are likely to be lower if access rights are assigned initially to platform owners rather than content providers. In addition, platform hardware owners are likely to be more efficient holders of these rights because they can internalize demand-side interactions among content products. Further, failure to permit platform owners to control access threatens to result in inadequate incentives to invest in, to maintain, and to upgrade local broadband platforms. Inefficiently denying platform owners the ability to own access rights implies a need for price regulation; otherwise, there will be incentives to use pricing to circumvent the constraint on rights ownership. Price regulation is itself known to induce welfare losses through adaptive behavior of the constrained firm. The impact on welfare might produce a worse result than the initial problem, assuming one existed. Much of the academic interest in net neutrality arises from the belief that the open architecture of the Internet under current standards has been responsible for its remarkable success, and a wish to preserve this openness. We point out that the openness of the Internet was an unintended consequence of its military origins, and that other, less open, architectures might have been even more successful. A policy of denying platform owners the ability to own access rights could freeze the architecture of the Internet, preventing it from adapting to future technological and economic developments. Finally, we examine the net neutrality issue from the perspective of the "essential facility doctrine," a tool of the common law of antitrust. The doctrine establishes conditions under which federal courts will mandate access by competitors to the monopoly platform of a vertically-integrated firm. Because local broadband Internet access is not today a bottleneck monopoly (there are several competitors and the market is at an early stage of development), the essential facilities doctrine would not permit reassignment of access rights from platform owners to competitors. We conclude that "net neutrality" is a welfare-reducing policy proposal.Technology and Industry, Regulatory Reform

Vertical Merger Enforcement Actions: 1994–April 2020

We have revised our earlier listing of vertical merger enforcement actions by the Department of Justice and Federal Trade Commission since 1994. This revised listing includes 66 vertical matters beginning in 1994 through April 2020. It includes challenges and certain proposed transactions that were abandoned in the face of Agency concerns. This listing can be treated as an Appendix to Steven C. Salop and Daniel P. Culley, Revising the Vertical Merger Guidelines: Policy Issues and an Interim Guide for Practitioners, 4 JOURNAL OF ANTITRUST ENFORCEMENT 1 (2016)

Limits To Certainty in QoS Pricing and Bandwidth

Advanced services require more reliable bandwidth than currently provided by the Internet Protocol, even with the reliability enhancements provided by TCP. More reliable bandwidth will be provided through QoS (quality of service), as currently discussed widely. Yet QoS has some implications beyond providing ubiquitous access to advance Internet service, which are of interest from a policy perspective. In particular, what are the implications for price of Internet services? Further, how will these changes impact demand and universal service for the Internet. This paper explores the relationship between certainty of bandwidth and certainty of price for Internet services over a statistically shared network and finds that these are mutually exclusive goals.Comment: 29th TPRC Conference, 200

A Survey on Communication Networks for Electric System Automation

Published in Computer Networks 50 (2006) 877–897, an Elsevier journal. The definitive version of this publication is available from Science Direct. Digital Object Identifier:10.1016/j.comnet.2006.01.005In today’s competitive electric utility marketplace, reliable and real-time information become the key factor for reliable delivery of power to the end-users, profitability of the electric utility and customer satisfaction. The operational and commercial demands of electric utilities require a high-performance data communication network that supports both existing functionalities and future operational requirements. In this respect, since such a communication network constitutes the core of the electric system automation applications, the design of a cost-effective and reliable network architecture is crucial. In this paper, the opportunities and challenges of a hybrid network architecture are discussed for electric system automation. More specifically, Internet based Virtual Private Networks, power line communications, satellite communications and wireless communications (wireless sensor networks, WiMAX and wireless mesh networks) are described in detail. The motivation of this paper is to provide a better understanding of the hybrid network architecture that can provide heterogeneous electric system automation application requirements. In this regard, our aim is to present a structured framework for electric utilities who plan to utilize new communication technologies for automation and hence, to make the decision making process more effective and direct.This work was supported by NEETRAC under Project #04-157

WCDMA in Malaysia

Wideband Code Division Multiple Access (WCDMA) A 3G highspeed digital data service provided by cellular carriers that use the time division multiplexing (TDMA) or GSM technology worldwide, including AT&T (formerly Cingular) and T-Mobile in the U.S. WCDMA works on WCDMA cell phones as well as laptops and portable devices with WCDMA modems [1]. Users have typically experienced downstream data rates up to 400 Kbps [1]. WCDMA has been used in the Japanese Freedom of Mobile Multimedia Access (FOMA) system and in the Universal Mobile Telecommunications System (UMTS); a third generation follow-on to the 2G GSM networks deployed worldwide [1]. Although TDMA and GSM carriers both use TDMA modulation, WCDMA stems from CDMA. Part of the 3GPP initiative, the International Telecommunication Union (ITU) refers to WCDMA as the Direct Sequence (DS) interface within the IMT-2000 global 3G standards [1]

The Beginnings and Prospective Ending of “End-to-End”: An Evolutionary Perspective On the Internet’s Architecture

The technology of “the Internet” is not static. Although its “end-to- end” architecture has made this “connection-less” communications system readily “extensible,” and highly encouraging to innovation both in hardware and software applications, there are strong pressures for engineering changes. Some of these are wanted to support novel transport services (e.g. voice telephony, real-time video); others would address drawbacks that appeared with opening of the Internet to public and commercial traffic - e.g., the difficulties of blocking delivery of offensive content, suppressing malicious actions (e.g. “denial of service” attacks), pricing bandwidth usage to reduce congestion. The expected gains from making “improvements” in the core of the network should be weighed against the loss of the social and economic benefits that derive from the “end-to-end” architectural design. Even where technological “fixes” can be placed at the networks’ edges, the option remains to search for alternative, institutional mechanisms of governing conduct in cyberspace.

On Factors Affecting the Usage and Adoption of a Nation-wide TV Streaming Service

Using nine months of access logs comprising 1.9 Billion sessions to BBC iPlayer, we survey the UK ISP ecosystem to understand the factors affecting adoption and usage of a high bandwidth TV streaming application across different providers. We find evidence that connection speeds are important and that external events can have a huge impact for live TV usage. Then, through a temporal analysis of the access logs, we demonstrate that data usage caps imposed by mobile ISPs significantly affect usage patterns, and look for solutions. We show that product bundle discounts with a related fixed-line ISP, a strategy already employed by some mobile providers, can better support user needs and capture a bigger share of accesses. We observe that users regularly split their sessions between mobile and fixed-line connections, suggesting a straightforward strategy for offloading by speculatively pre-fetching content from a fixed-line ISP before access on mobile devices.Comment: In Proceedings of IEEE INFOCOM 201

Regulation of telecommunication and deployment of broadband

This memorandum explores the question whether regulation in telecommunications encourages or hampers the development of new technologies. Contrary to other network industries, the telecommunications industry is more and more characterized by several, competing networks, such as cable, copper, and wireless. Regulation is, however, still needed as in several components of telecommunications sources of market power remain. The key issue in the regulation of access to a network is dealing with the possible trade-off between static efficiency and dynamic efficiency. Favourable conditions for access to the network contribute to allocative efficiency and productive efficiency, but can negatively affect incentives for investments in upgrading of existing infrastructures and developing new ones. In the Netherlands, regulation of the telecommunication industry is designed to enhance competition between alternative infrastructures without affecting the technology choice of both incumbents and entrants. In the market for unbundled access to the local loop and the market for high quality wholesale access, a trade-off exists between static efficiency and dynamic efficiency. Regulated access tariffs, which are based on average costs, seem to be a good compromise between static and dynamic efficiency. Tariffs for access to the local loop reflect actual costs of the existing copper infrastructure, giving entrants incentives to make efficient make-or-buy decisions. In addition, the threat of infrastructure competition in the local loop, as well as the service-based competition between providers using different infrastructures, i.e. copper and cable, provide incentives for the incumbent to increase efficiency. Our overall conclusion is that Dutch regulation of the telecommunication industry gives efficient incentives for technological developments such as the deployment of broadband. See also: Do market failures hamper the perspectives of broadband?