"Broadband: Should We Regulate High-Speed Internet Access?" is a collection of papers presented at a conference October 4-5, 2001 at the AEI-Brookings Joint Center for Regulatory Studies, plus two more papers from a later conference at Columbia University. The book has to tackle two main tasks. The first is to explain some of the technological complexities of broadband, or high-speed Internet access, for people who don't know DSLAM from DOCSIS. The second is to discuss the theoretical regulatory framework, as well as the specific policy proposals in Washington to regulate or deregulate this field, for the people who can't tell the difference between Tauzin-Dingell and the Telecommunications Act of 1996.
This diverse group of papers includes a good mix of descriptive, theoretical and empirical work, including some experimental economics. Sponsored by both AEI and Brookings, there is also a mix across the political spectrum. The book is a success in that it does manage the tasks listed above. The only problem with the book, unfortunately a major one, is its timeliness. Not only has technology moved quickly in this field since the conference was held, but there have been big changes in the business world and Washington as well.
The technology lag is illustrated quickly in the book, in what looked to be a promising paper by Hal Varian. It provided the results of an experiment to determine the demand for broadband Internet access via a controlled market experiment. Unfortunately, the experiment took place in 1998 and 1999, and the "broadband" was a 128 K ISDN line, less than one-twentieth the speed of the broadband connection that this review will take when sent to the Business Economics editors. In that time frame, pre-Napster and Kazaa and with streaming video in its infancy, there wasn't an overwhelming reason to demand those high speeds. While the methodology and reasoning in the article are quite interesting, the results are no longer meaningful. (To be fair, the editors do point out that the study is from "an ancient era in Internet time.") Another article, by Paul Rappoport, Donald Kridel and Lester Taylor, provide a more recent demand estimate, with data from dial-up and broadband users from mid-2001.
Article comments
1 - Eric Olsen
Terrific Bruce, thanks! If any topic has seen the instant obsolescence of books, its high tech.
2 - TDavid
Resisted the urge to raise my hand when I read the passage about 128K ISDN. We had one of those, once upon a time and it was nearly four times the cost of what we're paying for DSL today that's many times over faster.
The truth is there a lot of available bandwith that isn't being utilyzed and the possibilities will be exciting when that higher bandwith is available to/in the majority of homes.
Currently there still isn't even 50% broadband penetration compared to modems and that's unfortunate.
3 - Bill Wallo
I'll be curious to read some of the stuff on "regulation" of broadband. Regulation can often stiffle creativity (because it tends to institutionalize the status quo).
4 - Bruce Kratofil
Bill --
The other side effect of regulation is the law of unintended consequences. Often, there are side effects that pop up, some good and some bad. Joseph Heller, in his novel "Good as Gold" states it as
"Nothing succeeds as planned"