Can ‘Big’ Wireline Broadband Internet Networks be Considered an Essential Facility?

Abstract

The structure of 'big' wireline broadband Internet access markets is transforming in many geographic areas from a duopoly (broadband Internet access provided by telecommunications carriers and cable operators) to a monopoly. Incumbent operators of 'big' wireline broadband Internet access markets reserve a portion of the broadband capacity within their last-mile networks to provide favourable treatment to their own broadband applications and content. In particular, providers of emerging online video distribution services are relegated to accessing their customers by means of a less efficient path. This paper considers the question as to whether reserved broadband capacity can be deemed an essential facility and access opened up to stand-alone Internet applications and content through application of the antitrust laws. The arguments for and against treating reserved broadband capacity as an essential facility are presented and evaluated. The paper finds that reserved broadband capacity can be treated legally as an essential facility and that mandating access to the facility promises to provide significant efficiency benefits to consumers who purchase online video distribution services. 'Net neutrality maintains that I have paid for an Internet connection at a certain quality, say, 300 Mbps, and you have paid for that quality, then our communications should take place at that quality. Protecting this concept would prevent a big ISP from sending you video from a media company it may own at 300 Mbps but sending video from a competing media company at a slower rate. That amounts to commercial discrimination' (Tim Berners-Lee, Scientific American Magazine, December 2010).