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Abstract:
Network neutrality has emerged as one of the highest profile issues in telecommunications and Internet policy last year. Not only did it play a pivotal role in both houses of Congress during debates over proposed communications reform legislation; it also emerged as a key consideration during the Federal Communications Commission consideration of the recent SBC-AT&T, Verizon-MCI, and AT&T-BellSouth mergers. In the following exchange, Professors Tim Wu and Christopher Yoo engage in a lively debate over the merits of network neutrality that reviews the leading arguments on both sides of the issue.

Abstract:
A chorus of commentators has drawn inspiration from the end-to-end argument first advanced by Saltzer, Reed, and Clark and called upon policy makers to mandate that last mile broadband providers adhere to certain principles of network neutrality. In this symposium contribution, Professor Christopher Yoo offers an economic critique of these proposals, concluding first that they are based on a fundamental misreading of Saltzer, Reed, and Clark, who actually reject attempts to turn the end-to-end argument into a categorical mandate. In addition, prohibiting the use of proprietary protocols can harm consumers by skewing the Internet towards certain types of applications. Finally, network neutrality raises the even more significant danger of forestalling the emergence of new broadband technologies by reinforcing the existing supply-side and demand-side economies of scale and by stifling incentives to invest in alternative network platforms. Although such considerations would be problematic under any circumstances, they carry particular weight with respect to industries such as broadband, which are undergoing rapid technological change.

Telecommunications,regulated industries,cyber-law

Abstract:
The Supreme Court's Brand X decision has reignited the debate over "network neutrality," which would limit broadband networks' authority to impose restrictions on end users' ability to access content, run applications, and attach devices and to charge content and application providers higher prices for higher levels of quality of service. In this Article, Professor Christopher Yoo draws on the economics of congestion to propose a new analytical framework for assessing such restrictions. He concludes that when transaction costs render metering network-usage uneconomical, imposing restrictions on bandwidth-intensive activities may well enhance economic welfare by preventing high-volume users from imposing uncompensated costs onlow-volume users. Usage of bandwidth-intensive services can thus serve as a useful proxy for congestion externalities just a sport usage served as a proxy for consumption of lighthouse services in Coase's classic critique of the economic parable of the lighthouse. In addition, content delivery networks and other commercial caching systems represent still another innovative way to manage the problems associated with congestion and latency that would before closed by network neutrality. Furthermore, allowing network owners to differentiate their services can serve as a form of price discrimination that can mitigate the sources of market failure that require regulatory intervention in the first place. This frame work suggests that broadband policy would be better served by embracing a network diversity principle that would eschew a one-size-fits-all approach and would allow network providers to experiment with different institutional forms until it can be shown that a particular practice is harmingc ompetition. At most, concerns that telephone companies may prevent end users from using their digital subscriber line(DSL) connections to access Voice over Internet Protocol (VoIP) provide support for targeted regulatory intervention. They do not justify a blanket prohibition of end user restrictions that network neutrality proponents envision.

Abstract:
Recent mergers and academic commentary have placed renewed focus on what has long been one of the central issues in media policy: whether media conglomerates can use vertical integration to harm competition. This Article seeks to move past previous studies, which have explored limited aspects of this issue, and apply the full sweep of modern economic theory to evaluate the regulation of vertical integration in media-related industries. It does so initially by applying the basic static efficiency analyses of vertical integration developed under the Chicago and post-Chicago Schools of antitrust law and economics to three industries: broadcasting, cable television, and cable modem systems. An analysis of the market structure of these industries reveals that the preconditions recognized by both Schools as necessary for vertical integration to harm competition do not exist. In addition, the cost structure of these industries suggests that vertical integration may well lead to efficiencies sufficient to justify allowing such integration to occur.

A dynamic efficiency analysis also suggests that attempts to regulate vertical integration in these industries are probably misguided. Growing reliance on compelled access to redress the problems purportedly caused by vertical integration threatens to dampen investment incentives in technologically dynamic industries in which such incentives are particularly important. Not only does forcing a monopolist to share an input deviate from the system of well-defined property rights needed to promote efficient levels of investment, it also deprives new entrants seeking to compete directly with the supposed monopoly bottleneck of their natural strategic partners. The Article also engages a complex web of arguments involving the extent to which technological innovation is affected by market concentration, standardization, and network externalities. A close review of the economic literature reveals that the relationship between these factors is too ambiguous to support the type of simple policy inference needed to prohibit vertical integration as a regulatory matter. The Article concludes with an analysis of the intellectual and institutional obstacles for adopting a more integrated economic approach to vertical integration in these industries.

Abstract:
In this Article, Professor Yoo takes issue with the emerging scholarly consensus in favor of "network neutrality," which would prohibit network owners from employing proprietary protocols or entering into exclusivity agreements with content providers that would reduce the transparency of the Internet. Economic theory suggests that network neutrality advocates are focusing on the wrong policy problem. Rather than directing attention on the market for Internet content and applications, the segments of the industry that are the most competitive and the most likely to remain that way, communications policy would be better served if the focus were placed on the segment of the industry that is the most concentrated and protected by entry barriers, which in the case of broadband is the last mile. Furthermore, network neutrality is something of a misnomer. Standardizing protocols would inevitably favor certain applications over others and would place the government in the unfortunate position of picking technological winners and losers. The regulatory tools needed to implement network neutrality are also likely to prove ineffective in a world in which communications are increasingly decommodified and in which technological change has become increasingly dynamic.

Most importantly, network neutrality threatens to make things worse by reinforcing the sources of market failure in the last mile and dampening incentives to invest in alternative network capacity. Instead, Professor Yoo proposes a "network diversity" approach that would use product differentiation to encourage investment and to mitigate the supply-side and demand-side scale economies associated with the impact of up-front, fixed costs and by network economic effects. Network diversity can thus make it possible for three different last-mile networks to coexist: one optimized for traditional Internet applications such as e-mail and website access, another for security-sensitive applications like e-commerce, and a third for time-sensitive applications such as VoIP. Although the welfare implications and institutional considerations are complex, in the end Professor Yoo concludes that the policy balance tips in favor of network diversity.

Abstract:
Since the impeachment of President Clinton, there has been renewed debate over whether Congress can create institutions such as special counsels and independent agencies that restrict the president's control over the administration of the law. Initially, debate centered on whether the Constitution rejected the executive by committee used by the Articles of Confederation in favor of a unitary executive, in which all administrative authority is centralized in the president. More recently, the debate has focused on historical practices. Some scholars suggest that independent agencies and special counsels are such established features of the constitutional landscape that any argument in favor of a unitary executive is foreclosed by established practice. Others, led by Bruce Ackerman, claim that the New Deal represented a constitutional moment that ratified big changes in the distribution of power within the federal government. Still others argue that the added policymaking role of the modern administrative state means Congress ought to be able to impose greater limits on presidential control over the execution of the law. To date, however, a full assessment of the historical record has yet to appear.

This Article is part of a larger project offering a comprehensive chronicle of the battles between the president and Congress over control of the administration of federal law. It reviews the period between 1945 and 2004, paying particular attention to the Clinton impeachment and the lapse of the independent-counsel statute. The record shows that presidents from Harry S. Truman through George W. Bush consistently defended the unitariness of the executive branch, vitiating any claim that a custom of allowing congressional incursions on the unitary executive has emerged. In fact, the episodes discussed herein eloquently illustrate both the legal and the normative arguments supporting the unitary executive.

executive, constitutional law, legal history, special counsels, independent agencies

Abstract:
A fundamental transformation is taking place in the basic approach to regulating network industries. Policy makers are in the process of abandoning their century-old commitment to rate regulation in favor of a new regulatory approach known as access regulation. Rather than controlling the price of outputs, the new approach focuses on compelling access to and mandating the price of inputs. Unfortunately, this shift in regulatory policy has not been met with an accompanying shift in the manner in which regulatory authorities regulate prices. Specifically, policy makers have continued to base rates on either historical or replacement cost.

We argue that courts and policy makers have largely ignored the fact that this fundamental shift in regulatory approach demands an equally fundamental shift in the approach to setting prices. Economic theory suggests that regulatory authorities should base access prices on market prices. In addition, because compelled access to most telecommunications networks requires that competitors be permitted to place equipment on the network owner's property, access requirements constitute physical takings for which market-based compensation must be paid. Although the unavailability of market-based determinants once justified basing prices on some measure of cost, the shift in regulatory policy (especially when combined with the emergence of direct, facilities-based competition made possible by technological convergence) has caused the justifications for refusing to set rates on the basis of market prices to fall away.

We then use these insights to analyze access pricing with respect to three emerging regulatory issues: (1) access to unbundled network elements mandated by the Telecommunications Act of 1996, (2) the access to utility poles compelled by the 19996 amendments to the Pole Attachments Act, and (3) open access to digital subscriber line (DSL) and cable modem networks providing high-speed broadband services.

Abstract:
Telecommunications regulation has experienced a fundamental shift from rate regulation to increased reliance on compelled access. Of particular note, the Telecommunications Act of 1996 imposed no fewer than four access requirements. Unfortunately, each access requirement is governed by a separate set of rules for determining both the scope and the price of access. The resulting ad hoc regime has created difficult definitional problems and opportunities for regulatory arbitrage. What is needed is a system capable of integrating all of the different forms of access into a single analytical framework. Professors Spulber and Yoo propose just such a system inspired by the discipline of mathematics known as graph theory. They set forth a system for classifying different access regimes into five categories: (1) retail access, (2) wholesale access, (3) interconnection access, (4) platform access, and (5) unbundled access. They then describe the effect of each type of access on network capacity and configuration. Specifically, they show how each type of access further complicates the already difficult problems of network management and examine how mandated access introduces inefficient biases into decisions about network capacity and design. The discussion also considers the transaction cost implications of the different types of access. Building on the Coasean theory of the firm, the authors present a theory of network boundaries. Firms establish networks based on the tradeoffs between internal governance costs and the external transaction costs of providing access. They conclude by considering the effects of regulation on the boundaries of networks and examining the likelihood that private ordering through markets will lead to efficient network design.

network regulation, telecommunications

Abstract:
Recent Supreme Court decisions and the impeachment of President Clinton has reinvigorated the debate over Congress's authority to employ devices such as special counsels and independent agencies to restrict the President's control over the administration of the law. The initial debate focused on whether the Constitution rejected the executive by committee employed by the Articles of the Confederation in favor of a unitary executive, in which all administrative authority is centralized in the President. More recently, the debate has begun to turn towards historical practices. Some scholars have suggested that independent agencies and special counsels have become such established features of the constitutional landscape as to preempt arguments in favor of the unitary executive. Others, led by Bruce Ackerman, have suggested that the New Deal represented a constitutional moment that ratified major changes in the distribution of power within the federal government. To date, however, a complete assessment of the historical record has yet to appear.

This Article is part of a larger project that offers a comprehensive chronicle that places the battles between the President and Congress over control of the administration of federal law in historical perspective. It reviews the period between 1889 and 1945, beginning with the Administration of Benjamin Harrison, ending with the Administration of Franklin Delano Roosevelt, and paying particular attention to FDR's failed attempt to reorganized the executive branch. The record reveals that these Presidents during this period consistently defended the unitariness of the executive branch to a degree sufficient to keep the issue from being foreclosed by history. In fact, the episodes discussed provide eloquent illustrations of the legal and normative arguments supporting the unitary executive.

Unitary Executive

Abstract:
The dominant approach to regulating communications networks treats each network component as if it existed in isolation. In so doing, the current approach fails to capture one of the essential characteristics of networks, which is the complex manner in which components interact with one another when combined into an integrated system. In this Essay, Professors Daniel Spulber and Christopher Yoo propose a new regulatory framework based on the discipline of mathematics known as graph theory, which better captures the extent to which networks represent complex systems. They then apply the insights provided by this framework to a number of current policy issues, including the decision to apply the same methodology to set prices for interconnection and access to unbundled network elements under the Telecommunications Act of 1996, the decision to base access rates on cost, proposals to base access prices on market benchmarks, compelled access to broadband networks, and the regulation of Internet telephony. They also explore the extent to which the framework can be employed to support a formal calculation of regulated rates, concluding that a shift to a graph theoretical framework has the potential to revolutionize network policy.

Abstract:
Over the course of the last year, policymakers have begun to consider whether antitrust can play a constructive role in the network neutrality debate. A review of both the theory and the practice of antitrust suggests that it does have something to contribute. As an initial matter, antitrust underscores that standardization and interoperability are not always beneficial and provides a framework for determining the optimal level of standardization. In addition, the economic literature and legal doctrine on vertical exclusion reveal how compelling network neutrality could reduce static efficiency and show how mandating network neutrality could impair dynamic efficiency by deterring investment in alternative last-mile technologies. As such, network neutrality is better suited to the ex post, case-by-case approach associated with the rule of reason than the ex ante, categorical approach associated with per se illegality and regulation. To say that the substantive principles of antitrust offer insights that can inform the debate is not to say that antitrust courts represent the ideal institutional locus for enforcing a network neutrality mandate. Lingering questions about courts' institutional competence to supervise access regimes suggest that to the extent that antitrust enforcement authorities wish to take a more active role with respect to network neutrality, they would be better served by focusing their efforts on disclosure and consumer education rather than attempting to use antitrust to impose access requirements on network owners.

antitrust, net neutrality, Internet regulation, standardization, interoperability, network economic effects, interconnection, vertical exclusion, vertical integration, vertical restraints, sector specific regulation

Abstract:
Antitrust has long played a major role in telecommunications policy, demonstrated most dramatically by the equal access mandate imposed during the breakup of AT&T. In this Article we explore the extent to which antitrust can continue to serve as a source of access mandates following the Supreme Court's 2004 Trinko decision. Although Trinko sharply criticized access remedies and antitrust courts' ability to enforce them, it is not yet clear whether future courts will interpret the opinion as barring all antitrust access claims. Even more importantly, the opinion contains language hinting at possible bases for differentiating among different types of access, in contrast to previous analyses, which have generally grouped all of the forms of access into a single category. We build upon this language to offer an analytical framework, based on a branch of mathematics known as graph theory, that captures the manner in which different components of network can interact with one another as part of a complex system. Our analysis also offers a basis for classifying the different types of access into five categories: retail, wholesale, interconnection, platform, and unbundled. We then employ this framework to analyze a range of policy and doctrinal issues, including the current debate over network neutrality.

antitrust, telecommunications, access, Trinko, graph theory, network theory, essential facilities doctrine, vertical exclusion, vertical integration, state action immunity, primary jurisdiction, abstention, dynamic efficiency, retail access, wholesale access, interconnection access, platform access

Abstract:
Early Internet scholars proclaimed that the transnational nature of the Internet rendered it inherently unregulable by conventional governments. Instead, the Internet would be governed by customs and practices established by the end user community in a manner reminiscent of the lex mercatoria, which spontaneously emerged during medieval times to resolve international trade disputes independently and autonomously from national law. Subsequent events have revealed these claims to have been overly optimistic, as national governments have evinced both the inclination and the ability to exert influence, if not outright control, over the physical infrastructure, the domain name system, and the content flowing across the network. These failures have done little to lessen the allure of Internet self-governance. In particular, some scholars have suggested that more widespread use of open source software would increase the Internet's ability to resist governmental control. This Essay explores whether more widespread use of open source software might provide the basis for the type of bottom-up ordering associated with the lex mercatoria. Perhaps unsurprisingly, a system of self-governance based on open source implicate the same questions of spontaneity, universality, and autonomy that surround the lex mercatoria.

open source software, lex mercatoria, UNIDROIT, copyright misuse, patent misuse, arbitration

Abstract:
Existing analyses of the economics of copyright have largely overlooked the implications of the somewhat unusual economics of product differentiation. The omission is unfortunate, because adoption of a differentiated products approach yields significant insights that the current theories cannot provide. First, the differentiated products approach offers a better account for many features of real-world markets for copyrighted works. Second, it reveals that nonrivalry in consumption - widely regarded as the distinguishing economic feature of copyright - may not play as central role in the analysis as generally believed. Third, it reveals that the supposed tension between providing access to creative works and providing sufficient incentives to support their creation may not be as irreconcilable as generally believed. Instead, it shows how both considerations can be promoted simultaneously by facilitating entry by close substitutes for existing works. This approach contradicts the conventional wisdom, which holds that copyright protection should be kept to the lowest possible level that still permits creation of the works in question, and instead suggests that both sides of the access-incentives tradeoff can be promoted by strengthening some (but not all) aspects of copyright protection. Fourth, it allows for a more nuanced approach to copyright that can isolate the effect of three different ways in which copyright protection can be strengthened or weakened. This contrasts starkly with the current approach, which lumps all aspects of copyright protection into a single variable.

Abstract:
The conventional approach to analyzing the economics of copyright is based on the premise that copyrightable works constitute pure public goods, which is generally modeled by assuming that such works are non-excludable and that the marginal cost of making additional copies of them is essentially zero. These assumptions in turn imply that markets systematically produce too few copyrightable works and underutilize those that are produced. Moreover, any attempt to alleviate the problems of underproduction necessarily exacerbates the problems of underutilization and vice versa. In this Article, Professor Christopher Yoo argues that the conventional approach is based on a fundamental misunderstanding. A close examination of the foundations of public good economics reveals that the defining characteristic of public goods is the need to satisfy an optimality criterion known as the "Samuelson condition," which gives rise to a source of market failure that is distinct from the problems posed by non-excludability and zero marginal costs. Reframing the analysis in terms of the Samuelson condition also expands the number of ways in which the assumptions underlying pure public goods can be relaxed. In so doing, it suggests that markets for copyrighted works are more properly analyzed as impure public goods. Unlike markets for pure public goods, markets for impure public goods exhibit no systematic bias toward underproduction and are not bounded away from providing efficient levels of utilization. The insights of impure public goods theory thus have broad implications for a wide range of copyright-related issues, including fair use, duration, compulsory licenses, database protection, digital rights management, and derivative works.

Abstract:
This article responds to recent attempts to use democratic and republican principles as a basis for reforming copyright law. Taking the recent work of Neil Netanel as its text, the article begins by challenging the claim that media concentration necessarily reduces program diversity in a way that justifies reducing the duration and scope of copyright protection. An analysis of the theoretical and empirical literature on the economics of program choice reveals that the relationship between concentration and program diversity is more ambiguous than democratic theorists suggest. Whether concentration increases or reduces diversity depends on additional factors, such as the structure of viewer preferences, the availability of excess channel capacity, program costs, and the availability of direct viewer support in addition to advertising support. It is impossible to determine the impact of concentration on program diversity without analyzing these other factors.

The article also challenges the claim that free speech principles support reducing the duration and scope of copyright protection. To reach this conclusion, democratic copyright theorists rely on an instrumental vision of free speech that values speech only to the extent that it supports democratic decisionmaking. This vision of speech will draw little support from those who view rights as moral constructs, or from those who value speech for its furtherance of other values. Furthermore, any democracy-centered approach must necessarily offer some standard for determining whether copyright is providing the degree and type of public discourse required by the body politic. The failure of democratic copyright theorists to specify a baseline of the amount and type of speech required by a properly functioning democracy makes it impossible to evaluate the propriety of any of the proposed copyright reforms.

Abstract:
The emergence of broadband Internet technologies, such as cable modem and digital subscriber line (DSL) systems, has reopened debates over how the Internet should be regulated. Advocates of network neutrality and open access to cable modem systems have proposed extending the regulatory regime developed to govern conventional telephone and narrowband Internet service to broadband. A critical analysis of the rationales traditionally invoked to justify the regulation of telecommunications networks - such as natural monopoly, network economic effects, vertical exclusion, and the dangers of ruinous competition - reveals that those rationales depend on empirical and theoretical preconditions that do not apply to broadband. In addition, the current policy debate treats access to networks as a unitary phenomenon that fails to take into account how different types of access requirements can affect network performance in widely divergent ways. The current debate also fails to capture how individual network elements can interact in ways that can be quite unpredictable. In this Article, Professors Spulber and Yoo analyze broadband access using a theory of network configuration based on a branch of mathematics known as graph theory, which captures the interactions between individual components that cause networks to behave as complex systems. This theory yields a five-part classification system that provides insights into the effect of different types of access on network cost, capacity, reliability, and transaction costs.

graph theory, complex systems, network neutrality, open access, telecommunications, natural monopoly, ruinous competition, network economic effects, vertical exclusion, cable modem, digital subscriber lines, DSL, transaction costs

Abstract:
In this Article, Professor Christopher Yoo directly engages claims that mandating network neutrality is essential to protect consumers and to promote innovation on the Internet. It begins by analyzing the forces that are placing pressure on the basic network architecture to evolve, such as the emergence of Internet video and peer-to-peer architectures and the increasing heterogeneity in business relationships and transmission technologies. It then draws on the insights of demand-side price discrimination (such as Ramsey pricing) and the two-sided markets, as well as the economics of product differentiation and congestion, to show how deviating from network neutrality can benefit consumers, a conclusion bolstered by the empirical literature showing that vertical restraints tend to increase rather than reduce consumer welfare. In fact, limiting network providers' ability to vary the prices charged to content and applications providers may actually force consumers to bear a greater proportion of the costs to upgrade the network. Restricting network providers' ability to experiment with different protocols may also reduce innovation by foreclosing applications and content that depend on a different network architecture and by dampening the price signals needed to stimulate investment in new applications and content. In the process, Professor Yoo draws on the distinction between generalizing and exemplifying theory to address some of the arguments advanced by his critics. While the exemplifying theories on which these critics rely are useful for rebutting calls for broad, categorical, ex ante rules, their restrictive nature leaves them ill suited to serve as the foundation for broad, categorical ex ante mandates pointing in the other direction. Thus, in the absence of some empirical showing that the factual preconditions of any particular exemplifying theory have been satisfied, the existence of exemplifying theories pointing in both directions actually supports an ex post, case-by-case approach that allows network providers to experiment with different pricing regimes unless and until a concrete harm to competition can be shown.

Ramsey pricing, two-sided markets, product differentiation, congestion, vertical integration, vertical restraints, prioritization, price signals, dynamic efficiency, exclusivity, network economic effects, exemplifying theory, per se rules, rule of reason, network diversity

Abstract:
This symposium contribution explores how technological convergence and the shift towards access regulation are fundamentally transforming the basic tools and goals of telecommunications regulation. However, policy makers have largely ignored the manner in which access requirements can forestall the buildout of alternative transmission technologies. Simply put, compelling access discourages investment in new networks by rescuing firms that need network services from having to invest in alternative sources of supply. In addition, forcing incumbent carriers to share their networks cuts those who would like to construct alternative network facilities off from their natural strategic partners. As a result, access remedies can have the perverse effect of cementing existing monopolies into place.

In addition, policy makers have largely overlooked how technological convergence and the shift towards access regulation have undercut the justification for employing cost-based methodologies when setting rates. The more appropriate step at this point would be to adopt the more economically sound approach of basing rates on market prices.

Finally, the advent of convergence is also exerting pressure on the tendency under current law to regulate each communications technology as a universe unto itself. The impending shift to packet-switched architectures promises to cause all networks to become substitutes for one another. Indeed, it is possible to envision a world in which different network technologies act as complements rather than substitutes for one another, with different packets arriving in the house through the most efficient transmission media, a transformation that would pose its own share of regulatory challenges.

Telecommunications, regulated industries, cyber-law

Abstract:
This article examines how analytical, technological, and doctrinal developments are forcing the courts to reconsider their media-specific approach to assessing the constitutionality of media regulation. In particular, it offers a comprehensive reevaluation of the continuing validity of the Broadcast Model of regulation, which contains features, such as licensing and direct content regulation, that normally would be considered paradigmatic violations of the First Amendment.

Specifically, the analysis assesses the theoretical coherence of the traditional justification for extending a lesser degree of First Amendment protection to broadcasting than to other media (i.e., the physical scarcity of the electromagnetic spectrum) as well as the alternative constitutional justification based on the supposed unique pervasiveness and accessibility of broadcasting announced in FCC v. Pacifica Foundation. In particular, I discuss how the scarcity doctrine in effect allows the culture of regulation that pervades broadcasting to become the constitutional justification for more regulation. The analytical weaknesses in the current constitutional analysis are exacerbated by the deployment of alternative transmission and filtering technologies that are undermining the empirical foundations of current doctrine. I also trace the weakening of the traditional justifications as a doctrinal matter, as evidenced by the recent reluctance of the courts and the FCC to place any reliance on them.

The article then offers a critique of recent proposals by Cass Sunstein and Owen Fiss that attempt to use civic republican principles to uphold the constitutionality of the Broadcast Model. My analysis yields three core criticisms: First, Fiss's and Sunstein's proposals fail to come to grips with autonomy as a free speech value. Second, their theories ultimately prove to be quite problematic from the standpoint of implementation. Third, their theories fail to offer any plausible explanation of how to overcome certain technological obstacles. Thus, even if one were to accept all of the arguments offered by Sunstein and Fiss, it remains difficult, if not impossible, to see how their theories would bring about the world that they seek. The article closes by exploring several possible explanations for the persistence of the media-specific approach to the First Amendment.

Abstract:
One of the most enduring tenets of U.S. television policy has been the commitment to localism. I suggest that the FCC's localism policy can be disaggregated into four, more specific commitments: (1) the preference for locally oriented over nationally oriented programming, (2) the preference for free (i.e., advertising-supported) over pay television, (3) the preference for single-channel over multi-channel television technologies, and (4) the preference for incumbents over new entrants and new technologies. I then analyze each of these commitments in light of what is perhaps the most distinctive feature of the television industry, which is the fact that its cost structure gives television programming many of the qualities of a public good, and conclude that each of these four commitments is fundamentally flawed. I then employ the public goods analysis I develop to critique the manner in which policy makers are regulating conventional television broadcasting, cable television, direct broadcast satellite systems (DBS), digital television, and third-generation wireless devices (3G).

Abstract:
Most First Amendment analyses of U.S. media policy have focused predominantly on behavioral regulation, which either prohibits the transmission of disfavored content (such as indecent programming) or mandates the dissemination of preferred content (such as children's educational programming and political speech). In so doing, commentators have largely overlooked how program content is also affected by structural regulation, which focuses primarily on increasing the economic competitiveness of the media industries. In this symposium contribution, Professor Christopher Yoo employs economic analysis to demonstrate how structural regulation represents a form of architectural censorship that has the unintended consequence of reducing the quantity, quality, and diversity of media content. The specific examples analyzed include: (1) efforts to foster and preserve free television and radio, (2) rate regulation of cable television, (3) horizontal restrictions on the number of outlets one entity can own in a local market, and (4) regulations limiting vertical integration in television and radio. Unfortunately, current First Amendment doctrine effectively immunizes architectural censorship from meaningful constitutional scrutiny. As a result, Congress and the FCC must bear the primary responsibility for safeguarding free speech values against these dangers.

Telecommunications and Regulated Industries, antitrust, constitutional law

Abstract:
In recent years, a growing number of commentators have raised concerns that the decisions made by Internet intermediaries - including last-mile network providers, search engines, social networking sites, and smartphones - are inhibiting free speech and have called for restrictions on their ability to prioritize or exclude content. Such calls ignore the fact that when mass communications are involved, intermediation helps end users to protect themselves from unwanted content and allows them to sift through the avalanche of desired content that grows ever larger every day. Intermediation also helps solve a number of classic economic problems associated with the Internet. In short, intermediation of mass media content is inevitable and often beneficial. Calls to restrict intermediation have also largely overlooked the longstanding tradition reflected in the Supreme Court’s First Amendment jurisprudence with respect to other forms of electronic communication recognizing how intermediaries’ exercises of editorial discretion promote free speech values. The debate also ignores the inauspicious/dubious history of past efforts to regulate the scope of electronic intermediaries’ editorial discretion, which were characterized by the inability to develop coherent standards, a chilling effect on controversial speech, and manipulation of the rules for political purposes.

Internet, broadband policy, intermediation, mass media, net neutrality, editorial discretion, broadcast regulation, scarcity, Pacifica, cable television, privacy, security, dial-a-porn, time brokerage, Fairness Doctrine

Abstract:
In a recent essay published in the Yale Law Journal, Professor Neal Katyal proposes a series of structural reforms within the executive branch to compensate for what he sees as the collapse of Congress's ability to serve as an effective check on executive power. In this brief response, Professor Christopher Yoo suggests that any assessment of changes in the legislative-executive balance of power should take into account the increasing number of institutional mechanisms through which Congress can exert control over the executive branch. Professor Yoo also points out the extent to which Professor Katyal's argument relies on an expertise-centered conception of the federal bureaucracy that has been questioned by such noted scholars as Marver Bernstein, Richard Stewart, William Niskanen, Lawrence Lessig, and Cass Sunstein. Creating internal divisions within the executive branch would also dampen executive energy and accountability in areas in which such considerations are often critical. Finally, history counsels humility regarding the law's ability to check executive power and suggests that the most meaningful protections against presidential aggrandizement may well be political rather than legal.

administrative law, separation of powers, checks and balances, bureaucracy theory, executive power, presidential power

Abstract:
First Amendment analyses of media regulation have long focused on government efforts to influence media content directly. In contrast, ownership restrictions and other forms of structural regulation have generally been thought to pose fewer First Amendment concerns. But structural regulation - such as efforts to foster free television over pay television, rate regulation of cable television, restrictions on the number of outlets one entity can own in any media market, and regulations limiting vertical integration in television and radio - have had a dramatic influence on program content. Not only can structural regulations reduce the overall quantity and quality of media programming, but they can also create biases against the diversity of media content. Put another way, structural regulation often represents a form of "architectural censorship".

media, media regulation, media content, ownership restrictions, structural regulations, television, tv, cable tv, free tv, cable television, cable, media markets, vertical integration, radio, program content, media programming, FCC, censorship, First Amendment

Abstract:
The literature on the economics of copyright proceeds from the premise that copyrightable works constitute pure public goods, which is generally modeled by assuming that such works are nonexcludable and that the marginal cost of making additional copies is essentially zero. A close examination of the foundational literature on public goods theory reveals that the defining characteristic of public goods is instead the optimality criterion known as the “Samuelson condition,” which implies that the systematic bias toward underproduction is the result of the inability to induce consumers to reveal their preferences rather than the inability to exclude or price at marginal cost. Reframing the analysis in terms of the Samuelson condition also contradicts the hostility toward price discrimination reflected in much of the literature by implying that price discrimination is a necessary condition for optimality. At the same time, it implies that the producer need only appropriate the marginal benefits created by the public good, which in turn provides a basis for determining an optimal level of price discrimination that still permits consumers to retain some of the surplus. Moreover, broadening public good models to reflect the fact that copyrighted works often serve as imperfect substitutes for one another allows the number of works to be determined endogenously. In such impure public goods models, the systematic bias toward underproduction disappears, and price discrimination once again may (but need not necessarily) promote optimality.

intellectual property, public goods, Samuelson condition, access-incentives tradeoff, hedonic characteristics, spatial competition

Abstract:
One of the most distinctive developments in telecommunications policy over the past few decades has been the increasingly broad array of access requirements regulatory authorities have imposed on local telephone providers. In so doing, policymakers did not fully consider whether the justifications for regulating telecommunications remained valid. They also allowed each access regime to be governed by its own pricing methodology and set access prices in a way that treated each network component as if it existed in isolation. The result was a regulatory regime that was internally inconsistent, vulnerable to regulatory arbitrage, and unable to capture the interactions among network elements that give networks their distinctive character. In this Article, Professors Daniel Spulber and Christopher Yoo trace the development of these access regimes and evaluate the extent to which the emergence of competition among local telephone providers has undercut the rationales traditionally invoked to justify regulating local telephone networks (e.g., natural monopoly, network economic effects, vertical exclusion, and ruinous competition). They then apply a five-part framework for classifying different types of access that models the interactions among different network components. This framework demonstrates the impact of different types of access on network configuration, capacity, reliability, and cost. The framework also demonstrates how mandated access can increase transaction costs by forcing local telephone providers to externalize functions that would be more efficiently provided within the boundaries of the firm.

Antitrust, telecommunications, access regulation, graph theory, natural monopoly, network economic effects, vertical exclusion, managed competition, transaction costs, complex systems

Abstract:
On April 18-19, 2008, the University of Pennsylvania Law School hosted a landmark conference on The Enduring Lessons of the Breakup of AT&T: A Twenty-Five Year Retrospective. This conference was the first major event for Penn's newly established Center for Technology, Innovation, and Competition, a research institute committed to promoting basic research into foundational frameworks that will shape the way policymakers think about technology-related issues in the future.

The breakup of AT&T represents an ideal starting point for reexamining the major themes of telecommunications policy that have emerged over the past quarter century. The conference featured a keynote address by the Hon. Richard A. Posner of the U.S. Court of Appeals for the 7th Circuit, who reflected on the little-known role he played in the litigation. Panels addressed the following topics:

- Looking Back at Divestiture: What Worked? What Didn't? (Roger Noll, Paul MacAvoy, Alfred Kahn, Joseph Weber)
- Equal Access as the New Regulatory Paradigm: The Transition from Rate Regulation to Access Regulation (Glen Robinson, Tim Wu, Christopher Yoo, Gerald Faulhaber)
- Structural Separation in Dynamic Markets: Lessons for the Internet, Lessons for Europe (Joseph Farrell, Eli Noam, Michael Riordan, Michael Salinger)
- From the MFJ to Trinko: The Essential Facilities Doctrine and the Proper Provinces of Antitrust and Regulation (Daniel Spulber, Michael Katz, Timothy Brennan, Howard Shelanski)
- Regulation by Consent Decree: Lessons for Microsoft and Beyond (Richard Epstein, Robert Crandall, Daniel Rubinfeld, Philip Weiser)
- The Future of Intercarrier Compensation (Gerald Brock, Simon Wilkie, James Speta, Kevin Werbach)

Selected papers were published in the Federal Communications Law Journal.

antitrust, telecommunications, Modification of Final Judgment, divestiture, equal access, Trinko, structural separation, consent decree, intercarrier compensation

Abstract:
The current debate over broadband policy has largely overlooked a number of changes to the architecture of the Internet that have caused the price paid by and quality of service received by traffic traveling across the Internet to vary widely. Topological innovations, such as private peering, multihoming, secondary peering, server farms, and content delivery networks, have caused the Internet’s traditionally hierarchical architecture to be replaced by one that is more heterogeneous. Moreover, network providers have begun to employ an increasingly varied array of business arrangements. Some of these innovations are responses to the growing importance of peer-to-peer technologies. Others, such as paid peering and partial transit, are driven by the growing dominance of advertising-based business models as well as the insights provided by the economics of two-sided markets. At times interpreted as network providers’ attempts to promote their self interest at the expense of the public, these changes often reflect network providers’ attempts to reduce cost, manage congestion, and maintain quality of service. As such, they have the potential to yield substantial benefits both to individual consumers and to society as a whole.

broadband policy, Internet topology, private peering, multihoming, secondary peering, server farms, content delivery networks, peer-to-peer technology, paid peering, partial transit, two-sided markets, Internet advertising, congestion, quality of service, net neutrality

Abstract:
This article, written for the inaugural issue of a new journal, analyzes the extent to which the convergence of broadcasting and telephony induced by the digitization of communications technologies is forcing policymakers to rethink their basic approach to regulating these industries. Now that voice and video are becoming available through every transmission technology, policymakers can no longer define the scope of regulatory obligations in terms of the mode of transmission. In addition, jurisdictions that employ separate agencies to regulate broadcasting and telephony must reform their institutional structures to bring both with the ambit of a single regulatory agency. The emergence of intermodal competition will also place pressure on both telephone-style regulation, which protects against monopoly pricing and vertical exclusion, as well as broadcast-style regulation, which focuses on content and ownership structure. It will also force regulators to rethink social policies such as universal service and public broadcasting. At the same time, it is possible that convergence will be incomplete and that end users will maintain more than one network connection, which would reduce the danger of anticompetitive activity and allow policymakers to stop short of forcing every connection to be everything to everyone. Lastly, the increase in traffic volumes associated with the advent of Internet video may require the deployment of multicast protocols, content delivery networks, and more aggressive traffic management, all of which potentially implicate the debate over network neutrality currently taking place in the U.S.

Telecommunications, mass media, broadcast regulation, Internet, regulated industries, economic regulation, cost-of-service ratemaking, intermodal competition, unbundling, vertical exclusion, structural regulation, universal service, public broadcasting, IP video, multicast protocols, quality of serv

Abstract:
The deployment of telecommunications services in Korea represents one of the great technological success stories of the developing world. In a remarkably brief period, the penetration of local telephone service, wireless telephony, and broadband technologies has soared to among the highest levels in the world. The history of Korean telecommunications thus provides a useful case study for other developing countries seeking to expand and modernize their telecommunications infrastructures. At first blush, the explosive growth of telecommunications services has appeared to go hand in hand with the liberalization of Korea's telecommunications markets. A review of the history of Korean telecommunications reform reveals that the market liberalization that did exist was largely the result of foreign pressure. Moreover, although Korea took steps towards liberalizing its telecommunications markets, culminating with the substantial reforms announced in 1995, it has backslid since that time, allowing the industry to engage in a disturbing degree of re-concentration. As a result, Korea has not received the full benefit of the enhancements to consumer welfare, efficiency, and innovation that traditionally result from competition. It also suggests that, notwithstanding pronouncements to the contrary, the traditional pattern of direct governmental involvement in industrial policy remains firmly in place.

Telecommunications, regulated industries