Vertical Foreclosure in Broadband Access?

Abstract

The merger of AOL and Time Warner involved a vertical combination of the largest Internet content provider and aggregator and a large cable system operator which offers a conduit through which broadband customers can access Internet content at high speeds. We consider the economic incentives of such a firm to engage in two distinct vertical foreclosure strategies: (1) conduit discrimination—insulating its own conduit from competition by limiting rival platform distribution of its affiliated content and services, and (2) content discrimination—insulating its own affiliated content from competition by blocking or degrading the quality of outside content.