Economies of scale for broadband in rural United States

Empirical cost models for wireline broadband circuits are used to test whether economies of scale exist in rural areas and whether new Ethernet technology lowers the unit cost of broadband transportation. Previous studies have shown small or nonexistent economies of scale for wireless technology. Results from earlier studies also demonstrated economies of scale for voice-only wireline networks which diminished with network size and were fully exploited for large networks. To our knowledge presence of economies of scale for wireline broadband networks has not been tested, certainly not in rural United States. We use data supplied by more than 500 rural local exchange carriers and find economies of scale for small rural wireline broadband providers. Market size limitations appear to prevent rural telephone companies from fully exploiting unit cost savings. The data also show increasing capacity over existing broadband connections is subject to substantial economies of scale, but such economies diminish quickly as bandwidth capacity increases. The data do not support the hypothesis that Ethernet technology reduces broadband transmission cost.     

Telecommunications Investment and Traffic in Developing Countries: The Effects of International Settlement Rate Reforms

In 1997 the FCC ordered sharp decreases in international settlement rates (bilaterally negotiated telecommunication rates) between the U.S. and other countries. Developing countries, which received about $35 billion in net settlement payments from U.S. carriers between 1985 and 1998, claim that payments finance telecom investment and that reduced rates, and therefore payments, will harm investment. Using a panel dataset of 179 countries from 1985–1998, I find settlement rates negatively correlated with international telecom traffic, suggesting that reduced rates will stimulate traffic. I also find no evidence that payments finance investment as measured by telephone penetration and telecommunications equipment imports.     

On selecting a technology evolution path for broadband access networks

The rapid growth in the number of Internet users has accelerated the use of high-speed Internet access services, including broadband multimedia services. In the delivery of broadband multimedia services to end-users, it is necessary to build a high-speed backbone and access network. To construct a broadband access network, several alternative technologies including xDSL, CATV, and FTTx have been suggested and implemented in telecommunication networks. However, even if a technology is proven to be optimal for the current environment, it can be deteriorated by the elapse of time or the advent of new challenging technologies in the future. In this article, we concentrate on the selection of an evolution path for broadband access networks. We developed an optimization model for selecting the best technology and evolution path with the minimum total cost. The problem can be formulated as a mixed integer programming model. With a scenario for demands and cost factors, we find the optimal evolution path by solving our model with the CPLEX program and illustrate some sample paths for the broadband access network evolution plan. Once the cost and the demand are defined in detail to reflect the real-world case, our model can be useful to generate a practical technology evolution plan for broadband access networks in real-world applications.     

Estimating switching costs after introducing Fixed-Mobile Convergence in Japan

In this study, based on a conjoint-type survey analysis, the switching cost of several Japanese telecom services are empirically examined simultaneously, contingent on each carrier’s bundling strategies. The results suggest the following conclusions. The hierarchy of switching costs is mobile phone service, fixed phone service, ISP (Internet Service Provider), and broadband access service, in descending order. Even if the government prohibits the formerly state-owned monopoly NTT from forming alliances with other carriers, the legacy NTT group would still command more than half of the market share under FMC if each carrier adopts a pure bundling strategy. If mixed bundling emerges as the primary strategy in the FMC market, the resulting type of competition from the introduction of FMC does not stimulate competitive pricing.     

Demand estimation and market definition for broadband Internet services

This paper analyses residential demand for Internet access in Austria with a focus on broadband Internet connections. Austria has cable network coverage of about 50% and is, therefore, a good candidate to analyse the elasticity of demand for DSL where cable is available and where it is not. We also include mobile broadband via UMTS or HSDPA in our analysis and estimate various nested logit models to derive conclusions for market definition. The estimation results suggest that demand for DSL is elastic and that cable networks are likely to be in the same market as DSL connections both at the retail and at the wholesale level. We discuss possible implications for the regulation of wholesale broadband access markets. All views expressed are solely the authors’ and do not bind RTR or the Telekom-Control-Kommission (TKK) in any way nor are they official position of RTR or TKK.     

Optical networks and the future of broadband services

The evolution of broadband services will depend on the widespread deployment of optical networks. The deployment of such networks will, in turn, help drive increased demand for additional capacity. In this world, service providers will have a growing need to be able to flexibly adjust capacity to accommodate uncertain and growing demand. In this article, we present a cost model that highlights the advantages of new optical networking technologies such as Dense Wavelength Division Multiplexing (DWDM) over traditional architectures for optical networks. This analysis highlights the increased flexibility and scalability of DWDM networks, which lowers the deployment costs of such networks in light of growing and uncertain demand. The DWDM architecture holds the promise of allowing the emergence of wavelength markets, where traffic could be switched between service provider networks at the optical layer (without the need for multiple costly and wasteful electronic/optical conversions). While the DWDM and Optical Cross-Connect (OxC) technologies provide a technical infrastructure for supporting wavelength markets, additional developments are also likely to be required. This paper also considers some of the impediments to the growth of wavelength markets, namely, the need for secondary markets and standardized contracts.     

Fiber in the backbone! The impact of broadband adoption on firm growth in network markets

This article examined the relationship between the adoption of technology, via the deployment of broadband, on revenue growth, which is an important measure of financial performance, of the deploying firms using panel data for all of the major local exchange carriers in the US telecommunications industry from 1988 to 2001. The sector is an important network market context where the implications of deployment have substantial salience. The results show a positive relationship between broadband deployment and carriers’ revenue growth. This result implies that encouraging the adoption and deployment of broadband technologies in addition to the benefits of the consumers and firms at the receiving end of the new technology create the potential for better financial performance for the deploying firms. These results also imply that steps that can be taken to provide incentives that will hasten the further deployment of broadband will result in gains in financial performance within the sector.     

中国互联网企业发展模式探析——以腾讯为例

目前腾讯已成长为一家业务涉及即时通信、电子商务、在线支付、搜索引擎、信息安全以及游戏、视频、社交网络、电信增值服务等多种业务的互联网综合服务提供商,市值超过350亿美元,是全球市值仅次于谷歌和亚马逊的互联网公司。研究腾讯公司从单一到多元化发展模式得出,腾讯的成功归于以即时通讯为核心业务,机会导向中迅速发展、营销策略的灵活性、战略性与前瞻性并驱。     

Well beyond streaming video: IPv6 and the next generation television

The Internet has provided a plethora of commercial opportunities, the majority of them arising from advances in software and networking. As the technology evolves in an ever increasing pace, new opportunities are bound to be created. This paper examines how one of these technologies, the 6th version of the Internet Protocol, may affect the Internet and the opportunities associated with it, by looking at one specific emerging application: Internet Television (IPTv). In particular, the paper examines the possible impact and implications of multicasting on television broadcasts. Television and cable broadcasters have looked for ways to exploit the potential of narrowcast for a long time, but conventional narrowcast business models have been hampered by the geographic and technological limitations in reaching audiences big enough to be economically viable. The Internet, however, is naturally disposed toward one-to-one communications and high levels of interactivity thus providing a significant platform from which to broadcast.The television industry has been selected in order to highlight that emerging Internet technologies can significantly affect well-established industries and markets and create new opportunities when carefully exploited. More specifically by reducing entry barriers it can allow SMEs to enter markets that traditionally required large investments. The paper discusses the implications for policy makers and regulatory bodies, entrepreneurs wishing to start new channels, established television broadcasters and finally the viewers themselves.     

The digital economy: Where do we stand?

The rapid transition towards a “digital economy” was enabled by a converging set of innovations. Computing saw the development of the semiconductor transistor, integrated circuit, personal computers (PCs), operating systems, and graphical interfaces. The physical layer of telecommunication was enabled via the emergence of optical fiber and new wireless communication technologies, while networking saw the development of the Internet (essentially packet switching) and the World Wide Web. These advances combined to realize a series of new applications of information and communications technologies (ICTs) such as business software, e-mail, and e-commerce. However, progress seriously stumbled with the collapse of the dot com bubble, which among other things revealed a huge amount of misdirected investment that could have been used more productively. The question of the day is thus how to realize new “killer apps” to stimulate a new round of growth. The use of cell phones for communicating text, pictures, and video is a rapidly expanding area, but it seems unlikely that these applications will have a macroeconomic impact. Entertainment is a key industry whose fortunes are entwined with ICTs. Indeed, the application of ICT to innovating entertainment products is an important driver for the continued growth of the industry. Distribution of music and video via the Web could significantly stimulate demand but also raises the thorny question of how to protect intellectual property rights (IPR) of content providers. Another possible killer apps are interactive video-on-demand and telecalls/teleconferencing. The latter would, among other things, stimulate adoption of telework. The current Internet is capable of handing neither one-way transmissions of high-quality video nor interactive video-on-demand. There are bottlenecks both for the “last mile” connection from Internet service provider (ISP) to the home but also the “first miles” from originating server to ISP. The effective first miles bandwidth has not increased along with improvements in equipment, essentially because demand increases with capacity and thus traffic jams on the net continue. Digital subscriber line (DSL) technologies over telephone wires, and possibly wireless networks, will play important roles in getting over the last mile hurdle. Upgrading the first miles will probably require new networking protocols beyond TCP/IP that support multimedia and also changes in the economic model of information transfer via the Net.     

Market access in regulated and unregulated markets: The continuing cost of interstate motor carrier regulation

This study examines the effect of regulatory reform in the interstate trucking industry. In our model, carriers travel in round trips and choose to serve different markets corresponding to each leg of the trip. Some carriers have authority to haul freight subject to regulation while other carriers do not. Unlike previous studies, our model applies to decisions acrossmultiple legs. Using a bivariate probit, we find differences in the determinants of accessacross markets. Entry regulation has a significant influence only in markets dominated by regulated traffic, whereas location has a significant influence only in markets dominated by unregulated traffic.Name order was determined by a coin toss. Kenneth Boyer, Victoria Dailey, Gregory Duncan, Jo Anna Gray, Shane Greenstein, Edward H. Rastatter, and Joe A. Stone made a number of useful comments that improved the paper, and Marylynne Diggs made a number of editorial comments.     

Price,Programming and Potential Competition in US Cable Television Markets

Potential competition in the US cable television industry is empirically examined for 385 markets. Predicted entry probabilities are included in a supply-demand model to permit empirical investigation of the effect of potential competition on incumbent cable operators price and channel programming decisions. Estimation results show incumbents offer more channels to consumers in markets facing greater potential competition from broadband service provider (BSP) wireline overbuilders and/or incumbent local exchange carriers. In particular, when the probability of entry rises to about 42 the average cable system provides six more channels, and price per channel declines from US$ 0.77 to US$ 0.66.JEL Classification: L8, L9, L11We thank Ben Compaine, Shane Greenstein, Anne Hoag, Donald Waldman, Bradley Wimmer, the editor of this journal, an anonymous referee, and participants at the 30th Research Conference on Communication, Information and Internet Policy (TPRC 2002), September 28–30, 2002, Hilton Hotel, Alexandria, Virginia, for comments. Armando Galarraga and Nana Puangpathumanond provided research assistance, and Jane Frenette and Jonathan Levy provided excellent help with FCC cable entry and competition data. The usual disclaimer applies.     

后PC时代与无线感知网络在国民经济中的应用研究

更小、更廉价的低功耗计算设备代表的“后PC时代”冲破了传统台式计算机和高性能服务器的设计模式,普遍的网络化带来的计算处理能力是难以估量的,实现片上系统(简称SOC)的基础,在单一芯片上集成传感、信号处理、无线通信等功能的微型综合传感器逐渐成熟。以上三方面的高度集成又孕育出了许多新的信息获取和处理模式,无线感知网络就是其中一例。它在工农业生产、军事、环境保护、空间探索、灾难拯救、医疗健康和家庭生活等领域的目标跟踪和状态监控等方面都可得到广泛的应用。     

The Tenuous Grasp: Possession and Loss in the Marketplace

Generally speaking, markets serve as provisioning mechanisms, facilitating the supply of goods and services to customers. Extensive supply chains with specialist intermediaries create a flow of diverse items to consumers. However, market institutions can also serve as a de-provisioning technology, taking things away from customers. That is, markets can work in reverse. One example is the repossession of a vehicle. The process is often detrimental to low income and minority individuals.     

Coverage area expansion, customer switching, and household profiles in the Japanese broadband access market

This paper examines the diffusion process of Internet broadband access in Japan by modeling the household choice of access modes. Estimates reveal that the characteristics of users, rather than those of the access modes, play a significant role in demand substitution across the modes. Simulation exercises indicate that had optic fibers (fiber-to-the-home; FTTH) been made available to the whole country in 2005, only 10% of households would have switched to that mode. This result implies that once chosen, the household choice of access mode persists, and that indirect network effects are an important element in decisions to adopt the new technology of broadband. Finally, policy implications are discussed.     

Exploring additional determinants of fixed broadband adoption: policy implications for narrowing the broadband demand gap

Using data from the survey ‘Aspects of daily life’ conducted on Italian individuals in 2014 by the Italian Institute of Statistics, we propose new evidence on the factors that encourage the adoption of fixed broadband, a topic relevant for the reduction of the so-called broadband demand gap. We estimate a probit model through the two-step Heckman procedure for the selection bias, and find that, besides the already studied socio-demographic determinants, Internet-capable devices other than personal computers, as well as recreational (essentially video contents) and cloud-related uses of the Internet, have a relevant positive role. Policies aimed at fostering the diffusion of smart homes and more generally of the Internet of things at the residential level might be very effective in favouring fixed broadband adoption, provided that the network be neutral, not discriminating between data based on their contents and/or the destination device, and that possible foreclosing behaviours in the access to (premium) contents be properly and promptly addressed.     

Internet Economics and Policy: An Australian Perspective

Publicly available information indicates that the demand and supply of Internet and Internet–related services are continuing to expand at a rapid pace. Since 1997 the number of Internet service providers (facilities–based and resellers) has increased by nearly 40 per cent; the number of points–of–presence per Internet service provider has increased by five times; the number of hosts connected to the Internet has more than quadrupled; and Internet traffic has increased from six to 10 times. The emergence of electronic commerce (e–commerce), driven by this rapid adoption of Internet services and continual technological innovation, is likely to have profound economic and social impacts on Australian society. This paper provides a detailed analysis of the impact of the Internet and e–commerce, ranging from the changes in the market structure of the telecommunications industry, its role in changing the organisation of traditional markets, the emergence of new markets, and the structural shifts to employment, productivity and trade. The paper also analyses contemporary Australian regulatory responses.     

Competition enhancing regulation and diffusion of innovation: the case of broadband networks

Regulating former telecommunications monopolies has often been legally and technically complex. Among other options, incumbent operators were mandated to share, sell or split their infrastructure thus encouraging market entry. Given the importance of broadband technologies, competitive access has become a policy priority. We use data from 167 broadband markets over a period of 11 years. Firm and intra-platform competition on the incumbent’s legacy network (Digital Subscriber Line) accelerate adoption of broadband, whereas competition over different access technologies does not. The duration of the different regulatory effects shows that simpler network changes have a long-lasting yet delayed effect compared to technically demanding ones.     

On the optimal distribution of traffic of network airlines

Network airlines have increasingly focused their operations on hub airports through the exploitation of connecting traffic. However, in this paper we show that they may also have incentives to divert traffic away from their hubs. More precisely, we examine how the optimal distribution of traffic of network carriers can be affected by the two major recent innovations in the airline industry: the regional jet technology and the low-cost business model. On the one hand, we show that a network airline may find it profitable to serve thin point-to-point routes with regional jets when the distance between endpoints is sufficiently short and there is a high proportion of business travelers. On the other hand, we observe that a network airline may be interested in serving thin point-to-point routes by means of a low-cost subsidiary when the distance between endpoints is longer and there is a high proportion of leisure travelers. We conclude that network airlines are using those innovations to provide services on thin routes out of the hubs.