Thursday, August 11, 2005

Duopoly: good or bad for competition?

Consumer advocates seem to have a good point, opposing the FCC's freeing-up of DSL-networks from competitors, and the Supreme Court's decision to declare cable modem internet an information service.

These decisions will create a duopoly, shared among the Bells and the cable companies. In this sense it levels the playing field. So, either both decisions or none at all should be reversed. Now it comes down to deciding whether a duopoly is good or bad for competition.

It seems only too obvious that the Bells will have an incentive finally to boost both the throughput performance (bandwidths) and the coverage of their DSL-networks. The US may finally catch up with the likes of Belgium and South-Korea. But I think the benefits end there. The Bells could raise their prices, especially since the cable operators are in no hurry to start a price war. I think regulators in the US should foster local loop unbundling as much as their European counterparts. Look at what Free did in France, or FastWeb in Italy.

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