The Broadband Problem: Anatomy of a Market Failure and a Policy Dilemma

While the Internet revolution has vastly improved communications among businesses and individuals in the US, pressure has been building for faster and less expensive broadband data services. However, broadband services and prices have not kept pace either with demand or with progress in information technology. This title analyses the markets and policy issues underlying the broadband dilemma. Ferguson asserts that the Telecommunications Act of 1996 and federal policy have failed to provide sufficient levels of new entry, competition and innovation in the local telecommunications market, which remains dominated by monopoly telephone companies. New entrants and Internet-based firms remain disadvantaged relative to the monopoly incumbent local exchange carriers (ILEC). The combined result of these market and policy failures is inadequate technological progress, innovation and productivity growth in advanced Internet services and in telecommunications services in general. Ferguson believes federal policy must be adjusted to ensure the robust infrastructure necessary for advanced Internet services, electronic commerce, open-systems HDTV, videoconferencing and improved voice telephony.