Network Neutrality and Vertical Control: Lessons from Cable TV

30 Pages Posted: 24 Jan 2012

See all articles by David Waterman

David Waterman

Indiana University - Department of Telecommunications

Sujin Choi

Indiana University

Date Written: August 7, 2010

Abstract

Empirical research about the effects of vertical integration in cable television suggests that in spite of differences in the economic architectures of cable and Internet broadband, integrated ISPs have economic incentives in some realistic circumstances to favor vertically integrated content services and to restrict entry of (or foreclose) relatively less established ― rival content services. We also develop a simple ― discrimination shifting model to show that while a non-discrimination access rule such as that proposed by the FCC in October, 2009, is likely to diminish discrimination behavior by vertically integrated ISPs overall, it may have the effect of shifting similar ISP behavior downstream to the consumer retail level unless that market is also regulated.

We further conjecture that certain beneficial effects of vertical integration on financing and entry of programming networks that were identified in the cable industry are present, but likely to prove less important for ISPs, due to development since the 1980s and 90s of a large and robust programming supply industry that is mostly disintegrated with cable operators, other MVPDs, or ISPs. Finally, the history of both the cable and ISP industries makes evident that the fundamental policy concerns from an economic perspective are not vertical integration but horizontal market control of ISPs within local market areas and also via their significant national market shares of all broadband Internet subscribers.

Suggested Citation

Waterman, David and Choi, Sujin, Network Neutrality and Vertical Control: Lessons from Cable TV (August 7, 2010). TPRC 2010. Available at SSRN: https://ssrn.com/abstract=1989628

David Waterman (Contact Author)

Indiana University - Department of Telecommunications ( email )

1229 East 7th Street
Bloomington, IN 47405
United States
812-855-6170 (Phone)

Sujin Choi

Indiana University ( email )

107 S Indiana Ave
100 South Woodlawn
Bloomington, IN 47405
United States

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