Cato Policy Analysis No. 379 August 29, 2000

Policy Analysis

Open Access, Private Interests, and the Emerging
Broadband Market

by William E. Lee

William E. Lee is a professor in the Department of Telecommunications of the Henry W. Grady College of Journalism and Mass Communication, University of Georgia.


Executive Summary

The debate over open access to new cable broadband networks marks the first significant entry of Internet service providers (ISPs) into the great game of using the regulatory process to escape market realities. Quite simply, a legal requirement opening local cable networks to ISPs allows ISPs to avoid investing in alternative networks. It is tempting for businesses in this position to take a regulatory shortcut, asking lawmakers to force existing networks to let them piggyback on others' investments.

It remains to be seen how proprietary networks that bundle content and delivery will compete with voluntary open-access business models. Networks built on either model are extremely risky, and the consequences of regulatory interference with market incentives here could be devastating.

In addition, mandatory access regulation raises troubling First Amendment issues. The Internet is rapidly emerging as an important member of the press. The decision of the city of Portland, Oregon, to force an open-access model on @Home’s cable broadband network was initially approved by a judge who did not take @Home's First Amendment arguments seriously. The Ninth Circuit Court of Appeals did not reach First Amendment questions in ruling that open access to cable systems was a matter for the Federal Communications Commission, not local governments. In either forum, allowing government to determine what speech the networks must carry is a dangerous precedent. This analysis shows future policymakers the conflict between the First Amendment and mandatory open access.

Full Text of Policy Analysis No. 379 (PDF, 31 pgs, 165 Kb)

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