Hal J. Singer

Bio: Hal J. Singer is an academic researcher from University of California, Berkeley. The author has contributed to research in topics: Internet access & Competition (economics). The author has an hindex of 15, co-authored 73 publications receiving 907 citations.

Do Unbundling Policies Discourage CLEC Facilities-Based Investment

Abstract: An expanding economics literature has examined the theoretical linkages between mandatory unbundling in the telecommunications sector and the incentives to invest in facilities by both incumbent local carriers and competitive carriers. Recent empirical evidence that substantiates the theory has emerged. That literature documents CLECs’ reluctance to make facilities-based investments instead of availing themselves of incumbents’ UNEs at low regulated prices that are based on total element long-run incremental costs (TELRIC). By examining the variation in facilities-based investment in loops across U.S. states and over time, we find that facilities-based line growth relative to UNE growth was faster in states where the cost of UNEs was higher relative to the cost of facilities-based investment.

Cable Modems and DSL: Broadband Internet Access for Residential Customers

Abstract: To date, most residential customers to the Internet have used dial-up modems with a top speed of about 56.6 kbps [kilobits per second]. In the past two years broadband access has become available via cable modems offered by the local unregulated cable provider and via digital subscriber lines (DSL) offered by the local regulated telephone company (the incumbent local exchange carrier [ILEC]) and competitors who resell DSL using the ILEC facilities. Cable modems and DSL offer access speeds about 10-30 times higher than dial-up access and are termed broadband Internet access. Although Federal Communication Commission (FCC) regulation required ILEC's to sell the use of their facilities to competitors at below-cost prices, no regulation of cable companies has occurred. This outcome is curious given that cable companies have a significantly greater incentive to distort competition as a result of their unregulated monopoly profits from their cable operations. This asymmetric regulation by the FCC has led to the open-access debate. The open-access debate involves the question about whether the cable providers should be required to provide access to competing broadband Internet service providers (ISP's) or whether cable providers can use exclusive contract with their affiliated ISP's.Here, we consider the economic incentives and actions of the providers of broadband access with respect to limiting the usage of broadband access, including the potential competitive effects for cable television, a sector of the economy where, to date, system operators have been able to exercise significant market power. We answer the question of whether the price of narrowband Internet access constrains the price of broadband Internet access. We reject the hypothesis that the price of narrowband access does not affect the price of broadband access (transport) and ISP service is not rejected. Our finding is that lower narrowband access prices do not constrain the prices charged for broadband access.

The Empirical Case Against Asymmetric Regulation of Broadband Internet Access

Abstract: The United States has asymmetric regulation of the provision of broadband Internet access service. A cable television system operator is not regulated in its sale of cable modem service. In contrast, an incumbent local exchange carrier (ILEC) that offers digital subscriber line (DSL) service faces price regulation as well as the obligation to offer competitors the use of its broadband network on a wholesale (or, unbundled) basis so that they may offer, in the retail market, DSL services that compete with the ILEC's own retail offering to consumers. The social costs of asymmetric regulation are by now familiar. Such regulation leads not to deregulation, but to an enduring managed competition far more complex to administer than traditional regulation of a monopoly service provider ever was. The alternative to asymmetric regulation is either symmetric regulation or symmetric freedom from regulation. Assuming that the latter alternative is preferred, what actual steps would be taken to abolish asymmetric regulation of ILEC provision of broadband Internet access? The Federal Communications Commission (FCC) could remove asymmetric regulation that the agency itself previously imposed. The FCC could declare that broadband Internet access service is not a telecommunications service, subject to numerous regulations applicable to ILECs, but rather an information service, which is free of such regulations. Amid considerable controversy, the FCC invited public comment on such a reclassification in February 2002. Or the FCC could use its power under section 10 of the Communications Act to forbear from regulating ILEC provision of broadband Internet access. A third, and more incremental, approach would be for the FCC to declare ILECs nondominant in the provision of advanced services, such as broadband Internet access. Non-dominant carriers are exempt from price-cap or rate-of-return regulation, as well as the obligation to file tariffs and to establish the reasonableness of those tariffs through the submission of cost data. Much, if not all, of the economic analysis required to determine whether a carrier is nondominant also would be relevant to the FCC's decision whether to forbear from regulating a particular service or whether to reclassify the service in question as unregulated. Although the FCC did not receive its authority under section 10 to forbear from regulation until 1996, the agency has evaluated petitions for nondominance for a longer time and consequently has distilled a body of law on the subject. In this Article, we evaluate the case against asymmetric regulation of broadband Internet access through the lens of the FCC's approach to deciding petitions for non-dominance. We examine the economic evidence relevant to whether ILECs are non-dominant in the provision of mass-market broadband services, the most familiar of which is DSL service. We use a nested-logit discrete-choice model to produce econometric estimates of the own-price elasticity of demand for DSL service and the cross-price elasticity of demand for cable modem service with respect to DSL service. Our findings suggest that demand for DSL service is price-elastic, that DSL and cable modems are in the same product market, and that DSL providers lack market power. The FCC would advance the public interest by ruling that the ILECs are non-dominant in the mass-market broadband services market.

The Benefits of a Secondary Market for Life Insurance Policies

Abstract: In this article, we examine the benefits that accrue to policyholders and incumbent insurers from an active secondary market for life insurance policies. We begin by examining the benefits of secondary markets in the home mortgage and catastrophic risk insurance industries as points of comparison for the benefits of the secondary market for life insurance policies. Next, we outline the economic theory of a life insurance market both before and after the introduction of a secondary market. Although competition among insurance companies in the primary market leads to reasonably competitive surrender values given normal health, surrender values based on normal health do not appropriately compensate individuals with impaired life expectancies for the resulting appreciation of their policies. Without an active secondary market, the equilibrium quantity of impaired policies that is surrendered is inefficiently low. Incumbent insurance carriers have no incentive to eliminate this inefficiency because they hold monopsony power over the repurchase of impaired policies. Viatical and life settlement firms erode this monopsony power. Finally, we examine the benefits of an active secondary market for life insurance policies to policyholders and incumbent insurers in the primary market. The magnitude of the benefits is positively correlated to the quantity of coverage sold to life settlement firms and to the improvement in the terms of accelerated death benefits offered by incumbent carriers. The emergence of the secondary market for life insurance policies has been pro-competitive and pro-consumer. Lawmakers should therefore design regulations that encourage, rather than dissuade, participation and investment in this secondary market.

Cable Modems and DSL: Broadband Internet Access for Residential Customers

Abstract: To date, most residential customers to the Internet have used dial-up modems with a top speed of about 56.6 kbps [kilobits per second]. In the past two years broadband access has become available via cable modems offered by the local unregulated cable provider and via digital subscriber lines (DSL) offered by the local regulated telephone company (the incumbent local exchange carrier [ILEC]) and competitors who resell DSL using the ILEC facilities. Cable modems and DSL offer access speeds about 10-30 times higher than dial-up access and are termed "broadband Internet access." Although Federal Communication Commission (FCC) regulation requires ILEC's to sell the use of their facilities to competitors at below-cost prices, no regulation of cable companies has occurred. This outcome is curious given that cable companies have a significantly greater incentive to distort competition as a result of their unregulated monopoly profits from their cable operations. This asymmetric regulation by the FCC has led to the "openaccess" debate. The open-access debate involves the question about whether the cable providers should be required to provide access to competing broadband Internet service providers (ISP's) or whether cable providers can use exclusive contracts with their affiliated ISP's. Here, we consider the economic incentives and actions of the providers of broadband access with respect to limiting the usage of broadband access, including the potential competitive effects for cable television, a sector of the economy where, to date, system operators have been able to exercise significant market power.' Currently, AT&T is the nation's largest cable multiple system operator (MSO). AT&T also controls Excite@Home Corp., the largest provider of residential broadband service, with over 2.3 million subscribers in November 2000. Excite@Home has exclusive contract rights to provide residential broadband service over the cable facilities of its three principal equity holders (AT&T, Comcast Corporation, and Cox Communications, Inc.), which collectively account for over 35 percent of the nation's cable subscribers. Similarly, Time-Warner is the second-largest cable provider and has an exclusive contract with Road Runner, the secondlargest provider of broadband Internet service, with 1.1 million subscribers. The competitive implication of the exclusive arrangements are straightforward: to access an alternative broadband ISP instead of the ISP affiliated with the cable provider, a user of broadband cable access has to "pay twice." Alternative sources of delivery for video programming provide a competitive threat to the significant market power of the cable industry. Previously, the cable industry has unsuccessfully attempted to control access through control of satellite delivery of video programming, the first alternative medium for multichannel video programming. This attempted strategy was blocked by the Department of Justice (DOJ). Control of broadband Internet delivery of video programming, the second alternative medium for multichannel video programming, arises from cable-provider control of cable broadband access. Internet "video streaming" competes and will compete even more in the future with video programming offered by cable systems, satellite companies, and television broadcasters.

Platform Competition and Broadband Uptake: Theory and Empirical Evidence from the European Union

Abstract: Broadband access provides users with high speed, always-on connectivity to the Internet. Due to its superiority, broadband is seen as the way for consumers and firms to exploit the great potentials of new applications. This has generated a policy debate on how to stimulate adoption of broadband technology. One of the most disputed issues is about competition policies: these may be intended to promote competition in the Digital Subscriber Line (DSL) segment of the market (intra- platform competition), or to stimulate entry into the market for alternative platforms such as cable access or fiber optics (inter- platform competition). Using a model of oligopoly competition between differentiated products, our paper explicitly studies the effect of inter and intra platform competition on the diffusion of broadband access. The implications of the model are then tested using data from 14 European countries. The econometric evidence confirms the results of the theoretical model and indicates that while inter-platform competition drives broadband adoption, competition in the market for DSL services does not play a significant role. The results also confirm that lower unbundling prices stimulate broadband uptake.

The Supply Side of the Digital Divide: Is There Equal Availability in the Broadband Internet Access Market?

Abstract: The newest dimension of the digital divide is access to broadband (high-speed) Internet service. Using comprehensive U.S. data covering all forms of access technology (chiefly DSL and cable modem), I look for evidence of unequal broadband availability in areas with high concentrations of poor, minority, or rural households. There is little evidence of unequal availability based on income or on black or Hispanic concentration. There is mixed evidence concerning availability based on Native American or Asian concentration. Other findings: Rural location decreases availability; market size, education, Spanish language use, commuting distance, and Bell presence increase availability.