November 16, 2000

Public Interest Comment on High-Speed Access to the Internet Over Cable and Other Facilities

  • Jerry Ellig

    Research Professor, George Washington University Regulatory Studies Center
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The FCC is seeking comment on whether their current policy for high-speed services provided by cable operators remains the correct approach.

Summary

The fundamental question raised by the Federal Communications Commission's Notice of Inquiry is whether the Commission should continue the market-based approach to open access it has employed in regard to cable broadband, or intervene to require some form of open access. A thicket of legal points surrounds this question, but the Notice of Inquiry also raises several economic issues. RSP's economic analysis suggests that continuation of the Commission's market-based approach to open access will best promote consumer welfare. In theory, open access mandates can improve consumer welfare when the facilities subject to the mandate are monopolized. The broadband market, however, is anything but a monopoly, and so there is no consumer welfare justification for imposing open access in broadband.

In considering whether to require open access in broadband, the Commission risks being drawn into decisions that are more appropriately made in competitive markets through private, voluntary negotiation. The broadband market shows many signs of robust, dynamic competition. In a competitive broadband market, providers have strong incentives to offer whatever form of access maximizes the value of broadband Internet service to consumers. It is not clear whether the open model, the closed model, or some mixed model will emerge victorious. Nevertheless, as long as broadband remains competitive, we can be confident that the winning business model(s) will be those that best satisfy consumer desires. Therefore, the Commission's market-based approach to broadband open access is appropriate for all broadband providers.