Regulation and the Performance of Communication and Information Networks

Regulation and the Performance of Communication and Information Networks

Edited by Gerald R. Faulhaber, Gary Madden and Jeffrey Petchey

Digital markets worldwide are in rapid flux. The Internet and World Wide Web have traditionally evolved in a largely deregulated environment, but recently governments have shown great interest in this rapidly developing sector and are imposing regulations for a variety of reasons that are changing the shape of these industries. This book explores why the industrial organization of broadband ISPs, Internet backbone providers and content/application providers are in such turmoil.

Introduction

Edited by Gerald R. Faulhaber, Gary Madden and Jeffrey Petchey

Subjects: innovation and technology, technology and ict

Extract

Gerald R. Faulhaber, Gary Madden and Jeffrey Petchey Digital markets worldwide are in rapid flux. The Internet and World Wide Web have traditionally evolved in a largely deregulated environment, but recently governments have shown great interest in this rapidly developing sector and have been imposing regulations for a variety of reasons that are changing the shape of these industries. For good or ill, the industrial organizations of broadband ISPs, Internet backbone providers and content/application providers are in turmoil; even the immediate future is highly uncertain. Broadband ISPs no longer simply provide a conduit for service delivery, they are involved in producing content and transaction services themselves, in competition with content and delivery providers. Further, the traditional lines between and among all three of these sectors is blurring, as each enters into the others’ markets. We are seeing the emergence of powerful, competing platforms, linked in complex ways that challenge traditional economic analyses. In this context, debate focuses on vertical relations between downstream Internet service providers and upstream Internet backbone providers regarding transit arrangements and pricing for interconnection. Particular issues relate to appropriate service quality discrimination and interoperability standards. In particular, mobile operators must now compete with virtual mobile network (sometimes branded) resellers. These circumstances, along with convergence driven telecommunications operator and information technology provider rivalry, leaves a complex chain of substitutions in endusers’ markets to be analysed. For instance, the wireless-only household market segment has recently emerged. This phenomenon has implications for the delivery of triple-play service and the optimal...