Internet Access
In Brief: Tangled Web: The Internet and Broadband Open Access Policy
Research Report
Christopher Baker, AARP Public Policy Institute
March 2001
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Table of Contents: Key Findings | Conclusions
Most consumers who use the Internet today do so through a dial-up telephone line connection, a type of "narrowband" Internet access technology that delivers information at a relatively slow speed. With the emergence of "broadband" Internet access technology, many users can now connect to the Internet at higher speeds, enabling them to send and receive a range of new and enhanced voice, video, and data services. The potential benefits of moving from low-speed narrowband to high-speed broadband, however, may not be fully realized if the owners of broadband Internet access networks are able to exercise control over Internet content and stifle competition in the Internet service marketplace. This "In Brief" summarizes key findings of a recent AARP Public Policy Institute report that analyzes how competing Internet service and content providers are affected by the emergence of broadband Internet access networks. The report also considers how the actions of cable television companies which own broadband Internet Access networks may affect consumers' access to — and the future development of — the Internet. The report, entitled Tangled Web: The Internet and Broadband Open Access Policy,* was written by Trevor Roycroft, from the J. Warren McClure School of Ohio University.
Key Findings
Broadband Internet Access Facilities and Internet Service Markets
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Two Technologies - Currently, broadband Internet access
in the U.S. is provided through the use of two competing
technologies, cable television cable modem service and local
telephone company digital subscriber line (DSL) service, and
under two competing regulatory models.
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Two Regulatory Models - Consistent with the history of
the regulatory promotion of open access in telephone markets,
DSL customers can gain high-speed access to the Internet
through the Internet service provider (ISP) of their choice.
Cable customers, on the other hand, have limited or no choice
because owners of cable broadband networks are not required to
let unaffiliated ISPs offer Internet services over their
facilities.
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Incentive and Ability to Limit Consumer Choice - Cable
companies have adopted business strategies that tout their
market advantage in having control over broadband access and
ISP services. Without the constraints of competitive pressure
or regulation, cable companies have the incentive and ability
to limit customer choice and discriminate against unaffiliated
Internet content providers and web sites in favor of their
affiliates. Preferential product placement on start-up pages
and faster web site connections to affiliated web sites are
among the advantages that cable company ISPs can provide to
their affiliates which may limit customer choice.
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Nondiscriminatory Access - Discriminatory ISP behavior
is much less likely in an open access environment, where
customers have the ability to fire their ISP and choose a new
one. As a result, ISPs must compete on customer service issues,
including nondiscriminatory access to a variety of content and
e-commerce providers.
Top of PageIs There a Policy Basis for Cable Open Access?
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History of Regulatory Preference for Open Access - Over
the past 40 years, policymakers have acted to require open
access to telecommunications facilities controlled by monopoly
telephone companies. This policy of open access has led to
increased customer choice, technological innovation, and lower
prices - all significant public benefits.
- Consistent Principles for All Broadband Internet Access Technologies - By applying consistent open access principles to cable and telephone company broadband Internet access facilities, regulators would encourage competition between these alternative access technologies and likely increase the incentive of broadband access providers to invest in advanced services.
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Dim Prospects for Choice - While widespread competition
in the broadband industry would mitigate the need for
regulatory action, recent FCC data suggests the majority of
residential Internet users will not have a choice of broadband
access providers in the near future.
-
Insufficient Market Response - Despite commitments made
by AT&T and AOL Time Warner to open their networks to
competing providers of high-speed Internet service, market
forces have not provided a satisfactory solution to the open
access problem.
Conclusions
Internet Access Facilities as Telecommunications Services
The market is not working to open cable broadband facilities to competing providers of Internet services. Recognition that the transmission facilities that allow consumers to connect to the Internet are telecommunications services, regardless of the technology employed, is the first step needed to provide a foundation for competition and customer choice. As such, the Federal Communications Commission (FCC) should classify cable company Internet access facilities as telecommunications services and exercise a limited role in requiring open access to these facilities. However, the FCC should be prepared to take additional steps to promote competition in the market for Internet services if the requirement of cable open access alone proves insufficient to protect competition in the market for Internet services.
Written by Christopher Baker, AARP Public Policy Institute
February 2001
©2001 AARP
May be copied only for noncommercial purposes and with
attribution; permission required for all other purposes.
Public Policy Institute, Public Affairs, AARP, 601 E Street, NW,
Washington, DC 20049
Pub ID: INB35