Abstract

http://ssrn.com/abstract=899590
 
 

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The Economics of Build-Out Rules in Cable Television


George S. Ford


Phoenix Center for Advanced Legal & Economic Public Policy Studies

Thomas Koutsky


Connected Nation Inc.

Lawrence J. Spiwak


Phoenix Center for Advanced Legal & Economic Public Policy Studies


Hastings Communications and Entertainment Law Journal, Vol. 28, p. 207, 2006

Abstract:     
Firms that wish to offer wireline, multichannel video programming services in direct competition with cable incumbents are being faced with calls by those incumbents and policymakers to "build-out" to entire communities as a pre-condition to receiving a franchise. This "build-out" requirement is often incorporated into the local cable franchising process. In this paper, we show that build-out mandates are actually counter-productive and serve primarily to deter new entry, increase the profits of incumbents, and harm consumers. Using both a theoretical model and an empirical simulation, we show that build-out rules cause new video entrants to bypass certain communities entirely and sharply lower the number of communities in which new network construction would be profitable. We show that consumer welfare is likely to be higher with "free entry" policies that impose no build-out requirement.

Number of Pages in PDF File: 23

Keywords: Cable Television, Build-out Rules, Entry, Franchising

JEL Classification: H79, K23, K29, L10, L11, L13, L50, L98, L99, O33

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Date posted: May 8, 2006  

Suggested Citation

Ford, George S. and Koutsky, Thomas and Spiwak, Lawrence J., The Economics of Build-Out Rules in Cable Television. Hastings Communications and Entertainment Law Journal, Vol. 28, p. 207, 2006. Available at SSRN: http://ssrn.com/abstract=899590

Contact Information

George S. Ford
Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )
5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States
Thomas M. Koutsky
Connected Nation Inc. ( email )
1020 College St
Bowling Green, KY 42101
United States
Lawrence J. Spiwak (Contact Author)
Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )
5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States
202-274-0235 (Phone)
202-318-4909 (Fax)
HOME PAGE: http://www.phoenix-center.org
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