TPRC 2025: The 53nd Research Conference on Communications, Information and Inter

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Abstract:
Mergers in mobile markets are of keen interest to policy makers and scholars. Because carrier networks are subject to pronounced economies of scale and scope and given that communications regulators create substantial barriers to entry by limiting spectrum allocations for mobile services, wireless services generally exhibit relatively high levels of industrial concentration. Hence, antitrust authorities often struggle with the tradeoff between enhanced scale economies and enhanced market power. Between 2012 to 2016, for instance, four E.U. nations (Austria, Ireland, Germany, and Italy) consummated “4-to-3” mobile mergers while two such combinations were blocked (in Denmark and the U.K.). In the U.S., 4-to-3 transactions were blocked by regulators in 2011 and again in 2014, but a recent merger -- between the No. 3 (T-Mobile) and No. 4 (Sprint) carriers was approved in February 2020. This combination remains a subject of intense debate. We examine post-merger evidence of retail mobile subscription prices, network investment, service quality, market shares, and industry profits in the U.S. mobile communications industry. We conclude that the data are consistent with the thesis that the T-Mobile/Sprint merger produced consumer gains. This outcome is particularly interesting given that the government remedy imposed to mitigate potential anti-competitive merger effects, the creation of a new fourth network (DISH), has produced no plausible pro-competitive impact.

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Abstract:
The Digital Markets Act (DMA) is a cornerstone of European digital platform regulation. Gatekeepers are required to enable interoperability of their number-independent interpersonal communications services (NI-ICS), which are designated as core platform services (CPS) like e.g. messaging ser-vice WhatsApp. To this end the DMA defines a three-stage implementation of interoperability, start-ing with simple bilateral text communication with further features to follow over a period of four years (DMA, Art. 7(2)).
Using a consumer survey in Germany with 2,826 respondents, this study examines the potential effect of interoperability on consumer preferences for using specific NI-ICS. As NI-ICS are subject to network effects, demand tends to gravitate towards services with a larger user base, which has re-sulted in a highly concentrated market. Horizontal interoperability could counteract such tendencies towards concentration. However, this desired effect is highly dependent on the willingness of con-sumers to use NI-ICS in an interoperable manner, and which NI-ICS they choose to use as a result of interoperability.
There are two main findings from our consumer survey:
First, we find that almost all NI-ICS users in Germany tend to use NI-ICS (97%), which are designat-ed as CPS. WhatsApp alone is currently used by around 93% of NI-ICS users and is typically ac-cessed on a daily basis. In contrast, only 50% of NI-ICS users use an alternative (non-gatekeeper) service. Overall, alternative services are used less frequently and tend to play a subordinate role in the interpersonal communication of German users.
Second, very few NI-ICS users are opposed to interoperability, 64% consider it useful, and at each stage of implementation more than half of respondents indicate that they would use interoperability - at least in some cases – to communicate with specific contacts, via certain functions or via certain services. However, the majority of NI-ICS users that intend to adopt interoperability expect to contin-ue to use gatekeeper services to the same extent as they do now. In addition, the proportion of users who intend to use gatekeeper services to a greater extent than before the introduction of interopera-bility slightly outweighs the proportion of users who intend to use these services less. With regard to the use of alternative NI-ICS, the proportion of users who say they will use alternative NI-ICS less than before the introduction of interoperability is about twice as high as the proportion of users who intend to use these services more.
Therefore, interoperability as mandated by the DMA could lead to a reduction in the use of alternative NI-ICS by those NI-ICS users who choose to enable interoperability. It may even increase the incen-tive to use gatekeeper services, thereby contributing to the strengthening of gatekeeper ecosys-tems. Our results therefore call into question the incentive for alternative NI-ICS providers to de-mand interoperability from gatekeepers in the first place. Overall, our analysis suggests that the effect of the horizontal interoperability obligation for NI-ICS in the DMA may be contrary to the in-tended effect, or at least will not mitigate the concentration tendencies in the market for NI-ICS.

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Abstract:
A widening set of applications may soon be offered by broadband providers and edge providers, including home security, smart home, video conferencing, gaming, IoT device connectivity, autonomous vehicle connectivity, industrial control, and smart factory connectivity.

Multiple policy and regulatory issues surround these specialized services. Can they be offered over the Internet or do they require special treatment? When offered by broadband providers, are these offerings evading Open Internet rules regarding application-specific discrimination or prioritization? Can third-party application providers compete on a level playing field with ISPs offering such specialized services? What is the regulatory classification of the service and/or the underlying connectivity? Are existing regulatory schemes sufficient? If not, what rules should apply?

We consider two policy objectives. First, the development of specialized services should be encouraged, or at least not impeded, by the regulatory landscape. Second, to the extent there is a tradeoff between specialized services and broadband Internet access service, the regulatory landscape should strike a balance that is in the public interest.
Under the 2015 Open Internet Order, specialized services do not reach large parts of the Internet, are not a generic platform, and/or use isolated capacity. We propose an alternative approach, based on the Computer II framework, to classify the connectivity underlying specialized services as a telecommunications service, and to require this connectivity to be offered on a nondiscriminatory basis.

Under our proposed Computer II framework, a broadband provider could offer prioritized applications such as video conferencing and gaming, providing that it offers the same prioritization to end users on a nondiscriminatory basis. A broadband provider could also offer applications bundled with connectivity, such as home security, smart home, telemetry, automobile services, and industrial applications, providing that it offers the underlying connectivity to edge providers on a nondiscriminatory basis.

For prioritized applications, end users would be offered broadband plans that include the ability to prioritize applications of their choice. An end user could prioritize an application offered by a broadband provider and/or one offered by a third-party application provider. For bundled applications, end users could choose to obtain an application such as home security that runs over their broadband service or to obtain a bundle that includes both the application and the required underlying connectivity.

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Abstract:
Robert Bork’s The Antitrust Paradox (1978) has been a justification for a lack of antitrust enforcement for over four decades. This paper addresses how the Bork criteria can be used today, if applied correctly, to supplement the approach to antitrust. His test asks if consumers are harmed by the pricing practices of the firm in the market in which they purchase the good or service. Even if these firms are monopolies or oligopolies in their fields with huge economic rents, if they pass this test, no action is taken against them. “Bigness is not bad.” This narrow view, inter alia, ignores two- and multisided markets (MSM) where the appearance of “no harm” is addressed to only one side of the market. The correct view is to examine all the markets impacting potential harm to consumers. It illustrates the harm which is “free” to the users, but advertisers pay dearly for the ability to micro-focus on potential consumers of their products. Facebook and Google are used as examples. This advertising cost is added to the sales price of the product, resulting in consumers being harmed by the embedded advertising costs in the products or services purchased. We argue here, using Bork’s own criterion – except to expand it to the other side of the market – that much needed antitrust action has been ignored by this narrow criterion. This analysis indicates that antitrust action is long overdue after considering two-sided markets. In addition, we argue that his “consumers’ welfare” criterion is misleading and liable to deceive, thus the deception. The Biden administration has taken a more aggressive approach to antitrust and consumer protection than previous administrations. Three antitrust suits have been filed against Alphabet (Google) and two against Meta (Facebook) in the United States. The European Community, which has been more aggressive in its pursuit of Big Tech – Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, etc., is considering additional rules and regulation of the sector. This paper addresses how the Bork criteria can be used today, if applied correctly, to supplement the neo-Brandeisian approach. We address the Bork Paradox in its own terms by examining the second side of the market which harms consumers indirectly by increasing the price of the products and services they purchase. Using the corrected Bork metric – both sides of the market and no producer’s surplus – the estimated loss of consumers’ welfare was $101.9 and $36.8 billion respectively from Alphabet (Google) and Meta (Facebook), respectively in 2023. The cumulative loss from 2013 to 2023 is over $888 billion

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Abstract:
The paper covers a 40 year history of media ownership in the United States

This panel will discuss three key policy issues. Firstly, what can be learned from past government policy decisions to purchase commercial communications services? Secondly, what should NASA’s role be in different commercial models, and what might the advantages or disadvantages of various approaches be? Finally, how should NASA optimize the benefits of having a competitive market place, versus the economies of scale benefits of bulk purchasing?
 

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Abstract:
It is no longer clear who should pay whom and how much for interconnection between Internet Service Providers (ISPs) and content providers. Large ISPs claim that large content providers are imposing a cost on ISPs by sending large amounts of traffic to their customers. ISPs claim that it is more fair that content providers pay for this cost than consumers, because then this cost will be paid only by those consumers with high usage. In contrast, large content providers (including content delivery networks (CDNs)) claim that when they interconnect with ISPs at interconnection points (IXPs) close to consumers, they are already covering the costs of carrying traffic through the core network, and that consumers are already covering the costs of carrying traffic through the ISP's access network. These disputes between large ISPs and large content providers have recurred often during the last 10 years. When not resolved, large ISPs have often refused to increase capacity at interconnection points with large content providers and transit providers, resulting in sustained congestion which has degraded users' quality of experience.

In this paper, we examine internet interconnection policies to analyze the effects of paid peering arrangements between ISPs and content providers/transit providers using the two-sided market model. Our key findings indicate that paid peering is unlikely to result in lower consumer broadband prices. Our results also show that if a content provider or transit provider provides sufficient localization of exchanged traffic, an ISP incurs the same cost as it does when it agrees to settlement-free peering with another ISP. Our research also shows that the public interest is best served by peering prices that are lower than those likely charged by large ISPs.

Our analysis shows that settlement-free peering is warranted if a content provider or transit provider provides sufficient localization of exchanged traffic. Traffic is sufficiently localized if: (1) they interconnect at a reasonable number of interconnection points, (2) the locations of these interconnection points span the country, and (3) the proportion of traffic that is exchanged at an interconnection point that is relatively close to the end user is sufficiently high. In particular, our analysis shows that in the case of peering between an ISP and a content provider, settlement-free peering is warranted when they interconnect at a minimum of 6 interconnection points and localize at least 50% of the traffic.

Therefore, we argue that the Federal Communications Commission (FCC) should require ISPs to offer settlement-free peering arrangements to content and transit providers that agree to reasonably localize their exchanged traffic in this manner. We propose this policy recommendation as a means to serve the public interest by facilitating lower effective prices for internet data transport than market-negotiated paid peering fees. We also propose that the Commission should continue to monitor Internet traffic exchange arrangements under sections 201 and 202. In addition, however, it is now time for the Commission to determine that certain types of Internet traffic exchange arrangements are unreasonable or unreasonably discriminatory practices and would violate sections 201 or 202.

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Abstract:
Regulatory agencies have expressed concerns that usage-based pricing (UBP) of internet service steers consumers from streaming video to traditional TV subscriptions. We study this issue with household-level panel data from an internet service provider’s UBP experiment, capturing the pricing strategy’s effects on internet and TV subscriptions, application-specific internet usage, and payments to the firm. UBP served largely to meter internet usage by high-demand households rather than steering them toward TV. Households’ payments increased due to usage-related overage charges and internet subscription upgrades to avoid overages. Households that avoided internet-related payments reduced their internet usage rather than adding TV subscriptions.

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Abstract:
The availability of reliable, high-speed internet throughout the United States has been a focus of policymakers for decades, with the need for an expansive broadband infrastructure listed as “the great infrastructure challenge” of the 21st century by the Federal Communication Commission. Federal policy has been implemented to confront this challenge, with investments targeting unserved and underserved regions of the country totaled $50 billion from 2009 – 2017, with $44 billion also spent from 2015 - 2020. Additionally, internet service providers (ISPs) have invested hundreds of billions more in broadband infrastructure, with estimates as high as $102 billion in 2022 alone.

Despite this investment, millions of Americans still need a broadband connection at home. A big reason for this lack of connection is the cost of services. Recent attempts to assist low-income households have included the Emergency Broadband Benefit (EBB) and the Affordable Connectivity Program (ACP). Additionally, Congress allocated nearly $65 billion for broadband programs through the Infrastructure Investment and Jobs Act (IIJA) of 2021, with the majority of funding directed to the Broadband Equity, Access, and Deployment Program (BEAD). A key component outlined in the program’s notice of funding opportunity is that state broadband officials, tasked with implementing the program and distributing billions of federal dollars in new investments, must ensure that “high-quality broadband services are available to all middle-class families … at reasonable prices” for BEAD-funded projects.

However, federal guidelines have never set a benchmark for what “reasonable prices” might mean for residents in each state, and there are no established benchmarks for determining what an affordable level of broadband service would look like throughout the country. Complicating the matter is the federal government’s goal of universal broadband access by 2030, pledging to connect “every resident and small business to reliable, affordable high-speed internet” (The White House, 2023). However, as with previous telecommunications policies, the lack of a precise definition for what “affordable” means hinders achieving the goal of universal, affordable access (Crandall and Waverman, 2000). To advance assessments about affordability, this paper opens the discussion on what publicly available data would be needed related to broadband pricing that could fit within a continuum approach to broadband.