Broadband Rankings

1
(No Transcript)
2
Broadband Rankings
3
You Want a Higher Rank?Then Increase Subscription
1. Is Broadband Available?
Consumer Decision
2. Value gt Price?
4
Want More Broadband?

• Do things that increase deployment of network to
  unserved areas
• Increase profitability
• Increase Subsidies
• Do things that increase Value
• Investments in Higher Speeds
• Investments in New Services
• Do things that lower Price
• Quality Tiers
• More Spectrum
• Cable Franchise Reform

5
Does Your Policy Proposal
Increase Network Deployment to Unserved Areas?
Increase the Value of Broadband Services?
Lower the Price of Broadband Services?
Are all changes in these non-negative?
6
Cost Benefit Analysis
If you help one but harm the other, whats the
tradeoff?
VU PU gt VR - PR
Does the Value Price in the Unregulated World
exceed the Value Price in the Regulated World?
VU MUCU gt VR - MRCR
See Phoenix Center Policy Bulletin No. 16.
7
What Do We Know?

• There will be few, and probably diverse,
  broadband networks
• Wire/Wireless, Mobile/Fixed
• What does fewness imply?
• There could be intense price competition, or
  little
• There may be incentives to discriminate among
  content, or there may not be
• What do we know?
• We have at least some choice, and that typically
  helps us get more of what we want as consumers

See Phoenix Center Policy Paper No. 21.
8
What Do We Know?

• We do not regulate consumer broadband prices in
  this country no proposals to do so.
• What does this tell us?
• There is not enough market power to warrant
  regulation of end-user prices
• What do we know?
• If there is market power in broadband, there is
  not very much (or the cost of regulation is very
  large)
• People argue vociferously against a small
  percentage tax, but no one argues to regulate
  (suggesting market power effects are smaller than
  the tax effects)

9
What Do We Know?

• Broadband networks are two-sided markets
• Value of network depends on getting both content
  and subscribers on board
• What does two-sided markets theory tell us?
• Most of things we thought we knew about markets
  is wrong
• What do we know?
• Internet pricing likely will evolve and vary
  along many dimensions
• There is no per se anymore

10
What Do We Know?

• Broadband networks generally do not have the
  incentive to sabotage upstream firms. Better
  content increases the profits of broadband firms.
• What does this tell us?
• Note generally - under some conditions,
  sabotage may occur (typically, the result of
  regulation)
• What do we know?
• Sabotage is not a given.
• Proponents of regulation should be required to
  identify exactly what the general does not apply,
  and why the behavior they dont desire is bad for
  consumers.

11
What Do We Know?

• Markets outcomes never satisfy everybody
• Markets provide goods and services that can be
  sold at a minimum of zero economic profit
• What does this tell us?
• People will always have something to complain
  about
• What do we know?
• Complaining does not imply market failure
• Or, Simon Cowell is not an idiot you really are
  a horrible singer!

12
What Do We Know?

• Regulation may provide benefits, but always comes
  at a cost
• What does this tell us?
• We need an approximation of the cost and benefits
  (unintended consequences) of proposed regulation
• Regulate with reluctance and care
• What do we know?
• There is no free lunch
• Its an ill wind that blows no good
• The triumph of hope over experience

13
What Do We Know?

• People love the Internet.
• What does this tell us?
• Emotion could drive the debate
• What do we know?
• In an emotional frenzy, one can get away with all
  sorts of shenanigans
• Emotionally driven issue creates opportunity for
  government mandated wealth transfers

14
Phoenix CenterContributionsto the Debate
15
POLICY PAPER NO. 24 Network Neutrality and
Industry Structure

• Policymakers should balance concerns over
  potential discrimination against the possibility
  that particular network neutrality rules may
  encourage very aggressive price competition that
  is incompatible with multiple firm supply in the
  face of significant sunk costs and scale
  economies.

16
POLICY PAPER NO. 25 Network Neutrality and Rural
America

• We show that under plausible conditions, while
  network neutrality mandates negatively impact
  broadband deployment in all geographic areas
  regardless of average cost characteristics, such
  rules could disproportionately impact broadband
  deployment in high-cost areas.

17
POLICY BULLETIN NO. 16 Regulating Network Design

• We provide evidence that making bandwidth
  expansion the only solution to congestion could
  result in very expensive broadband.
• We also show that a monopolist will not make an
  investment in a cost-reducing technology, even if
  it reduces the value of service, unless that
  investment causes consumer surplus to rise.

18
POLICY PAPER NO. 28 Network Neutrality and
Transaction Costs

• Banning commercial exchange at one stage of the
  Internet may reduce investment in network, reduce
  the number of content providers, and raise the
  price of broadband service to end users. All
  this without substantially reducing the
  probability of anticompetitive pricing behavior.

19
(No Transcript)