Natural Experiments in U.S. Broadband Regulation

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7 Review of Network Economics 13–33 (Issue 4, December 2008).  Thomas W. Hazlett, Professor of Law & Economics, George Mason University School of Law, Anil Caliskan, Research Economist.

Regulations governing broadband networks are being considered. Natural experiments conducted with respect to “open access” rules yield probative marketplace evidence. Using the metric of subscribership, policy regimes are compared. Prior to 1Q2003, cable modem service was unregulated (and has remained so), while digital subscriber lines (DSL) were subject to network unbundling mandates. Those rules were effectively lifted in 1Q2003 and 3Q2005. Across regimes, subscriber growth appears significantly and negatively correlated with regulation. By year-end 2006, DSL subscribership was about 65% above the trend established in the regulated pre-1Q2003 era, a difference of eight to ten million households. Full text on SSRN: http://ssrn.com/abstract=1093393.

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