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The Market Structure of Broadband Telecommunications
Author(s) -
Faulhaber Gerald R.,
Hogendorn Christiaan
Publication year - 2000
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00125
Subject(s) - broadband , telecommunications , natural monopoly , monopoly , broadband networks , oligopoly , market structure , competition (biology) , universal service , internet access , the internet , telecommunications service , cable television , industrial organization , economic interventionism , business , government (linguistics) , economics , computer science , microeconomics , cournot competition , ecology , linguistics , philosophy , politics , world wide web , political science , law , biology
The recent growth of the Internet is creating markets for broadband telecommunications networks. In the past, virtually all such ‘infrastructure’ networks have been subject to government regulation. Two reasons advanced for this market intervention are (i) such networks constitute a natural monopoly, and (ii) to achieve ‘universal service’, in which all citizens have access to services. In this paper, we develop a model and estimate it using engineering data which tests if these two hypotheses are likely to obtain for broadband networks. We find that oligopolistic competition is likely to emerge for demand levels approaching that of today’s cable television.