Case studyUnderstanding impact of convergence on broadband industry regulation: a case study of the United States
Introduction
The history of the telecommunications industry demonstrates that the progress of communications technology does have an impact on the regulatory principles and the regulatory plans (Crandall, 1996).1 Currently, the development of communications technology has reached the stage in which it is leading to the convergence of communications networks and services and dramatically pushing the network evolution from the existing narrowband designed for voice communication to the broadband networks dominated by data communication. As a consequence, convergence gives rise to challenges to existing regulatory institutions (Clements, 1998, p. 197). This paper contributes to understanding convergence and its impact on broadband service regulation by systematically elaborating on the distinct features embedded in the advanced broadband networks from the aspects of broadband technologies, the pace of innovation, investment risk, market structure, etc. The main finding is that these distinct features question the rationales of equally imposing the existing telephone regulatory principles without any modification to the broadband networks and require that regulation on broadband services, if any, should be tailored to the specific features.
This paper proceeds as follows. In Section 2, convergence as a kind of dominant movement in the communication industries is studied. In Section 3, the paper surveys the alternative broadband technologies and network structures. In Section 4, the specific distinctions between the advanced broadband networks and existing narrowband networks are analyzed. Section 5 explores the impact of these differentiations on broadband network policy and regulation. Section 6 concludes the paper.
Section snippets
Convergence
Convergence can be traced back to the 1970s when the computer technologies gradually meld into the telecommunications industry (Parsons and Frieden, 1998, p. 11). However, not until the 1990s, did convergence become an overwhelming trend due to the digitalization from technological progress and competition from deregulation. The digitalization in telecommunications makes it possible that different services can be delivered through different networks, which were traditionally dedicated for
Alternative broadband technologies
Historically, the telecommunications infrastructure is designed for the delivery of voice signal rather than data and video services (Hundt and Rosston, 1998). Although widespread application of optical fibers, asynchronous transfer mode (ATM), and packet-switched technologies has significantly improved the trunk transmission speeds and switching functions, the local loop section, i.e. from central office to the customer premises equipment (CPE), is still dominated by twisted-pair lines.
Comparison between the narrowband and broadband networks
Based on the brief survey of alternative technologies in the broadband infrastructure discussed above, I turn to investigate the distinctions between the existing telecommunications networks and the emerging broadband networks. Accordingly, I will use the findings to elaborate on one of the hypotheses of the dissertation, i.e., that the advanced broadband networks, as a brand-new facility, should be treated differently in regulation compared to the existing narrowband telecom industry.
Implications for broadband services regulation
Broadband networks make necessary a re-examination of the regulatory principles and methods in the context of convergence. There are many important questions related to this issue. For instance, what are the rationales, if any, to regulate broadband networks? Should the broadband networks require different regulations because of the distinct features identified above? What kind of regulation would be needed to meet the broadband networks? It would be beyond the scope of this paper to fully
Conclusion
Convergence is a dominant trend in telecommunications and information industry, driven by the market demand of broadband services and promoted by competition and deregulation. As a brand-new movement, it challenges the theoretical rationales of regulation imposed on the narrowband telecommunications industry.
From the aspects of technology, service, investment, and market, this paper identifies and examines the distinct features associated with the broadband networks. In addition, the
Acknowledgements
The author would like to thank Douglas N. Jones, Anand Desai, Edwin A. Rosenberg and referees for the helpful comments and suggestions on earlier drafts of this paper. All remaining errors are the responsibility of the author.
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