Regulatory Treatment of IP Transport and Services

Current U.S. regulatory policy is incoherent in its treatment of packet-oriented data communications services. Services based on X.25, Frame Relay or ATM protocols are regulated as telecommunications services, while IP packet transport is lumped together with applications such as email and the World Wide Web -- and treated as an unregulated information service. Uncertainty also reigns over the appropriate treatment of IP telephony. As IP transport becomes an ever more significant fraction of all telecommunications, public policy problems posed by this inconsistent treatment are likely to increase

Measuring Broadband’s Economic Impact

Does broadband matter to the economy? Numerous studies have focused on whether there is a digital divide, on regulatory impacts and investment incentives, and on the factors influencing where broadband is available. However, given how recently broadband has been adopted, little empirical research has investigated its economic impact. This paper presents estimates of the effect of broadband on a number of indicators of economic activity, including employment, wages, and industry mix, using a cross-sectional panel data set of communities (by zip code) across the United States. We match data from the FCC (Form 477) on broadband availability with demographic and other economic data from the US Population Censuses and Establishment Surveys. We find support for the conclusion that broadband positively affects economic activity in ways that are consistent with the qualitative stories told by broadband advocates. Even after controlling for community-level factors known to influence broadband availability and economic activity, we find that between 1998 and 2002, communities in which mass-market broadband was available by December 1999 experienced more rapid growth in (1) employment, (2) the number of businesses overall, and (3) businesses in IT-intensive sectors. In addition, the effect of broadband availability by 1999 can be observed in higher market rates for rental housing in 2000. We compare state-level with zip-code level analyses to highlight data aggregation problems, and discuss a number of analytic and data issues that bear on further measurements of broadband’s economic impact. This analysis is perforce preliminary because additional data and experience are needed to more accurately address this important question; however, the early results presented here suggest that the assumed (and oft-touted) economic impacts of broadband are both real and measurable

Innovation strategies in the electronic mail marketplace

The author examines several crucial aspects of three types of office communications technologies: facsimile, communicating word processors, and computer based message systems. By identifying the technical, service and cost characteristics of each, he analyzes and compares their potential patterns of adoption and innovation.

Towards Technologically and Competitively Neutral Fiber to the Home (FTTH) Infrastructure,” http://100x100network.org/papers/banerjee-tprc2003.pdf

This paper provides a framework for understanding competition and industry structure in the context of Fiber to the Home (FTTH). We present engineering cost models, which indicate that FTTH is a decreasing cost industry, thereby making facilities based competition an unlikely outcome. Non-facilities based competition (or service level competition) in FTTH can happen in data-link layer (or transport) services via unbundled dark fiber (i.e. unbundled network elements) and in higher layer (voice, video and data) services via logical layer unbundling (or open access). FTTH architectures differ in the extent to which they support unbundling and therefore the extent of non-facilities based competition in FTTH depends on the architecture of the shared network over which multiple service providers offer service. Among the four different FTTH architectures considered, the curbside single-wavelength Passive Optical Network architecture (PON) that has isolated pole-mounted splitters has the most economical fiber plant but permits unbundling only at the logical layer. Consequently, though a PON supports ‘open access

Price Competition and Compatibility in the Presence of Positive Demand Externalities

In many cases, the benefit to a consumer of a product increases with the number of other users of the same product. These demand interdependencies are referred to in the literature as positive demand externalities or network externalities. This paper examines the dynamic pricing behaviors of an incumbent and a later entrant, with special attention to the impacts of demand externalities, compatibility, and competition on prices and profits. Defining market power as the ability to price above a competitor without losing market share, we show how demand externalities and installed base combine to confer market power. We model optimal pricing as a differential game with the optimal price trajectory established as Nash open-loop controls. For a duopoly durable goods market with strong demand externalities, the results show an increasing price trajectory can be optimal. As expected, a new entrant is better off if its products are compatible with those of the incumbent, especially when demand externalities are strong and the installed base of the incumbent is large. Less intuitively, the incumbent as well may be better off agreeing on common standards. The comparison of monopoly and duopoly shows that under strong demand externalities and a small installed base, the incumbent profits from compatible entry.diffusion, new products, dynamic pricing, duopoly competition, network externalities, compatibility, standards