Rethinking Broadband Internet Access

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.

Keywords: 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

JEL Classifications: K23, L12, L82, O33

Accepted Paper Series