Broadband Development: Who Stands to Gain

Abstract

The first Internet services which attracted users were e-mail and web. Broadbanddeployment have later enabled multimedia services like voice and video. This development disrupts the future outlook for both telephone operators and television broadcasters. It is nevertheless these stakeholders which have been responsible for broadband deployment of respectively DSL and cable. The strong belief in broadband for innovation, business, and public good have lead to deployment and upgrading of networks, encouraged by governments. Regulation of access networks and leased lines have made DSL an attractive choice for broadband providers. The thesis shows an example of such an ISP entrant in the Norwegian broadband market. It uses ADSL over LLUB to access its subscribers. The access cost dominates the running cost of the firm. Due to regulation and falling prices on IP equipment there are few competitive advantages by being an incumbent network operator. Easy entry to the ISP market, combined with low-cost fiber optic equipment lead to competition on price and bandwidth, which again lead to higher bandwidth offerings. Since IP is able to transport any kind of data it does not differentiate between services. However, to extract a maximum willingness to pay it is necessary to create barriers between products. Since the ISP market consist of many parties with different business cases, there are few opportunities to restrict certain services. There exists commercial solution for blocking or estricting certain types of data streams, but this opposes the Network neutrality principle. Content and service providers are strong advocates for Internet neutrality as their business cases are based on it. Broadband penetration and the free nature of Internet has also lead to new services like blogs and wikis, and given opportunities for new channels for sales and ommunication. One trend is for amateurs to create content and use Internet as distribution channel. The near zero distribution cost means that more different types of content will be available, not just the most commercial. Content offered targeted at a narrow audience is called the long tail offerings.