Competition and Cooperation Among Internet Service Providers

The convergence of the network technologies underlying Internet-, telecommunications- and cable-TV services will fundamentally change the regulation of these sectors. In so-called next generation networks, voice and video data will also be transmitted over the IP-technology of the Internet. Using the methods of applied micro-economics, this study analyzes the need for ex-ante sector-specific regulation in the markets for Internet service provision. The focus is on the economies of scale and scope associated with large network infrastructures as well as on the network externalities important in Internet service provision. The analysis concludes that there are no monopolistic bottlenecks in the core markets of Internet service provision. Effective competition among Internet service providers does, however, require regulated, non-discriminatory access to remaining monopolistic bottlenecks in the upstream market for local communications infrastructure. The study describes the extent of the necessary regulations in the Internet periphery and compares it to current regulatory practice in the United States and Europe. The book addresses practitioners in regulation and politics as well as the scientific community.