The Political Economy of Cable 'Open Access'

66 Pages Posted: 9 Oct 2001

See all articles by Thomas W. Hazlett

Thomas W. Hazlett

Clemson University

George Bittlingmayer

University of Kansas - Finance Area

Date Written: May 2001

Abstract

Advocates of "open access" claim that Internet Service Providers (ISPs) should be able to use a cable TV system's bandwidth on the same terms offered to ISPs owned by the cable system. On that view, "open access" mitigates a monopoly bottleneck and encourages the growth of broadband. This paper shows that cable operators do enjoy market power, and do seek to leverage a dominant position in video into the broadband access market by allocating too little bandwidth for Internet access. Yet, rather than protect cable operators from cannibalizing their cable TV revenue, this strategy defends against imposition of common carrier regulation, which would allow system capacity to be appropriated by regulators and rival broadband networks. Ironically, the push for "open access" limits Internet access by encouraging this under-allocation of broadband spectrum, and by introducing coordination problems slowing technology deployment. These effects are empirically evident in the competitive superiority of cable's "closed" platform vis-a-vis "open? DSL networks, and in financial market reactions to key regulatory events and mergers in broadband.

Suggested Citation

Hazlett, Thomas W. and Bittlingmayer, George, The Political Economy of Cable 'Open Access' (May 2001). AEI-Brookings Joint Center Working Paper No. 01-06, Available at SSRN: https://ssrn.com/abstract=286652 or http://dx.doi.org/10.2139/ssrn.286652

Thomas W. Hazlett (Contact Author)

Clemson University ( email )

Clemson, SC 29634
United States
8646563430 (Phone)
8646564192 (Fax)

HOME PAGE: http://hazlett.people.clemson.edu/

George Bittlingmayer

University of Kansas - Finance Area ( email )

Lawrence, KS 66045
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
313
Abstract Views
2,174
rank
116,919
PlumX Metrics