The economics of DSL regulation

Abstract

Despite a growing demand for highspeed Internet and network access in the US broadband market, many digital-subscriber-line companies are downsizing, scaling back service, or closing their doors altogether. More importantly, upstart independent DSL providers have gone to war with the Baby Bells, alleging that they have purposely accelerated the shakeout of start-up companies by exploiting all DSL providers' dependence on the last-mile network infrastructure that the Baby Bells provide. Separating the economic interests of incumbent exchange carriers and their affiliates will ultimately serve consumers best. An open market for DSL access run exclusively by the Baby Bells would avoid existing distortions and let regulation focus on encouraging the regional Bell operating companies to provide access to underrepresented areas where investment would otherwise be unjustified.