Competition and Regulatory Policies for Interactive Broadband Networks

Abstract

Few phrases in public policy have become so overused so quickly as the information highway. Although it is unclear to many what that superhighway is or will be, this uncertainty has not prevented proposals to regulate the superhighway from being made. In this Article, we examine the economic principles that should govern competition and regulatory policies concerning the development and operation of the information superhighway. In Part II of this Article, we discuss the evolution of technology for interactive broadband networks. While Part II analyzes the production (or supply) side of interactive broadband networks, Part III examines the demand side and asks: What is the likely market for interactive broadband services? In Part IV, we explain the economic principles for open entry and efficient, subsidy-free pricing that are now widely accepted for regulating network industries. In Part V, we analyze regulatory policies intended to prevent incumbent, regulated firms (such as local exchange carriers) from cross-subsidizing their deployment and operation of interactive broadband services to the detriment of equally efficient rivals - and, eventually, consumers. In Part VI, we examine whether new interactive broadband services should be regulated. In Part VII, our discussion turns to the Canadian telecommunications market because of our familiarity with certain policies raised there recently in a major regulatory proceeding. In Part VIII, we examine whether the Canadian cable television industry should be protected from competition while it upgrades its network to provide interactive broadband services, including services that would compete with the voice and data services of local exchange carriers.