The Coming Singularity in Media Regulation

Posted: 17 Mar 2016

See all articles by W. Russell Neuman

W. Russell Neuman

University of Michigan at Ann Arbor; New York University

Date Written: March 15, 2016

Abstract

The potential singularity identified in this paper is the cable-based internet service provider as the sole vendor capable of providing truly high speed broadband digital connectivity in the American context. The premise is that broadband IP replaces virtually all of its legacy competitors such as analog telephony and terrestrial broadcasting. This prospectively unchallenged chokepoint for political communication, advertising, entertainment and economic transactions could extract monopoly rents and distort otherwise open political processes. As minimally acceptable broadband throughputs escalate, the physical limitations of twisted-pair based digital subscriber loop technologies increasingly limit the incumbent telephone carrier as a meaningful competitor. Satellite-based IP service providers face equally if not even more daunting technical challenges in providing true broadband connectivity at scale. To avoid a return to the inflexibility of full tariff-based common carrier regulation of an inadvertent but potentially de facto monopolist, there remains one potential meaningful competitive technology for provision of broadband IP – terrestrial wireless, particularly the extension of uncapped cellular data into the marketplace for fixed provision. The particular advantage of such a model is the prospect of multiple carriers rather than a perpetuation of the present-day duopoly competition between cable and DSL service in the United States.

The balance of the paper reviews the technical, economic, regulatory and political basis of this proposition in more detail. These issues include: the hard-to-predict evolving marketplace definition of minimally acceptable broadband throughput, the temporal spikiness of the demand curve, the potential spectral demands of wireless broadband provision at scale, increasingly efficient fourth and fifth generation high speed wireless modulation standards, the politics and economics of the current and prospective spectrum auctions, the possibility of driving fiber deeper into the cellular system, the special case of rural access, the shrinking distinction between fixed and mobile IP, and the ramifications of such market dynamics for network neutrality policy.

The paper addresses two particular difficult impediments to a meaningful evolution of a marketplace for fixed wireless IP. The first is delicate market economics of wireless data caps. Most consumers consider cellular data and wireline-based Wi-Fi access as two different animals – one as billed by the bit and one by the month. The distinction, of course, is historical rather than technical and it may be hard to wean wireless providers from what are currently decidedly profitable schemes of data provision. The second is the realpolitik of incenting such major wireless players as Verizon and AT&T to, in effect, cannibalize their sunk-cost investments in wireline DSL.

The paper concludes with a brief review of international experiments in competitive IP provision that might offer lessons for the American case and global regulatory models more generally.

Keywords: Regulation U.S., Internet Service Provision, Wireless Data

Suggested Citation

Neuman, W. Russell and Neuman, W. Russell, The Coming Singularity in Media Regulation (March 15, 2016). Available at SSRN: https://ssrn.com/abstract=2748249

W. Russell Neuman (Contact Author)

New York University ( email )

Washington Square
New York, NY 10003-711
United States

University of Michigan at Ann Arbor ( email )

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