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World Telecommunications Markets

The International Handbook of Telecommunications Economics, Volume III

Edited by Gary Madden

This major reference work provides a thorough and up-to-date survey and analysis of recent developments in the economics of telecommunications. The Handbook serves both as a source of reference and technical supplement for the field of telecommunications economics.
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Chapter 10: The FCC and policy federalism: broadband Internet access regulation

Timothy Brennan


Timothy Brennan INTRODUCTION Across the US, cable television systems have begun to expand their offerings, beyond traditional multi-channel point-to-multipoint video to include using the bandwidth capacity of their coaxial cable and fiber-optic systems for high-speed broadband Internet service. Such broadband services offer the promise of delivering digital information to consumers at rates anywhere from ten to 50 times the speeds available via conventional modems. These higher speeds are most crucial for graphics, high fidelity sound and video. Over time, they may allow the Internet to become an important if not preferred medium for customized television services, music and software delivery, and video telephony. Generally, cable systems have preferred to enter this nascent market by providing broadband service exclusively through affiliated Internet service providers (ISPs) – for example, Time-Warner’s ‘Road Runner’ and TCI’s ‘@Home’. In the past year (1999–2000), city or county governments, most notably in Portland, Oregon, have required that TCI cable systems allow unaffiliated ISPs to provide broadband Internet service over the cable operator’s facilities.1 Localities have taken these initiatives as part of their legal role in approving the transfer of TCI-held franchises to AT&T, which had acquired TCI during that time. In the spring of 1999, a federal court upheld the right of Portland to impose these requirements. AT&T has challenged this decision. Then Federal Communications Commission (FCC) Chairman William Kennard has also challenged it, yet the FCC in November 1999 imposed similar requirements on local telephone companies, forcing them to allow...

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