The broadband access market : competition, uniform pricing and geographical coverage

Abstract

In this paper we analyze the market for broadband access. A key feature of this market is that it is considerably more expensive to connect consumers in rural locations than in urban locations. We show that while competition increases welfare compared to monopoly when prices are free to differ across locations, the opposite may be true if there is a requirement of uniform pricing across locations. Furthermore, we show that given uniform pricing, the regulator may increase welfare as well as profit by requiring a higher regional coverage than the market outcome.