The Market Structure of Broadband Telecommunications

The recent growth of the Internet is creating markets for broadband telecommunications networks. In the past, virtually all such 'infrastructure' networks have been subject to government regulation. Two reasons advanced for this market intervention are (i) such networks constitute a natura...

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Bibliographic Details
Published in:The Journal of industrial economics 2000-09, Vol.48 (3), p.305-329
Main Authors: Faulhaber, Gerald R., Hogendorn, Christiaan
Format: Article
Language:English
Subjects:
Broadband
Broadband transmission
Capacity costs
Competition
Cost estimates
Cost structure
Economic competition
Economic models
Economic theory
Housing demand
Market demand
Monopolies
Nash equilibrium
Publishing industry
Regulation
Studies
Telecommunications
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Summary:The recent growth of the Internet is creating markets for broadband telecommunications networks. In the past, virtually all such 'infrastructure' networks have been subject to government regulation. Two reasons advanced for this market intervention are (i) such networks constitute a natural monopoly, and (ii) to achieve 'universal service', in which all citizens have access to services. In this paper, we develop a model and estimate it using engineering data which tests if these two hypotheses are likely to obtain for broadband networks. We find that oligopolistic competition is likely to emerge for demand levels approaching that of today's cable television.
ISSN:0022-1821
1467-6451
DOI:10.1111/1467-6451.00125