This study examines the impact of telecommunications regulatory policy on broadband service deployment. Using U.S. data covering all forms of access technology (chiefly DSL and cable modem) and all areas served by major carriers, we investigate the impact of state and federal regulation on broadband availability. Alternative regulation increases the probability of broadband availability, particularly for price caps. Unbundled network element (UNE) rates, the prices incumbent carriers charge to competitors for access to the local exchange network, also matter. Areas with lower UNE rates have a slightly higher probability of broadband availability. The effects of UNE rates on broadband deployment are largest where incentive regulation is in place. Our objective in examining regulatory factors is to highlight the role of incentive regulation and local telecommunications competition policy—policies used or available around the world—in stimulating broadband service deployment.
Key Terms in this Chapter
Local Exchange Company (LEC): A public telephone company in the United States that provides local telecommunications service.
Wire Center: The location where a central office switch connects to the loop facilities that cover part or all of a local exchange. It is also the physical location where the loop distribution plant in the local telecommunications system can be accessed, and where the equipment enabling DSL service for subscribers is deployed. Used synonymously with “central office” in this chapter, although elsewhere sometimes the wire center refers to the physical building and the central office refers to the switches within the wire center.
ZIP Code Tabulation Area (ZCTA): An approximate area representation of a United States Postal Service ZIP Code service area. A ZCTA may not exist for every valid ZIP Code. In most cases, the excluded ZIP Code identifies a single delivery location for which the Bureau of the Census had insufficient data to establish a distinct ZIP Code area.
Unbundled Network Element (UNE): Allows competitive local exchange carriers to offer competitively priced alternatives to the incumbent’s services rapidly. UNEs are purchased at wholesale rates from the incumbent telephone companies. UNEs include the local loop, switch port, switching, transport, signaling systems, and databases (such as operations support systems and directory assistance). UNE-Platform (UNE-P, generally no longer available) combined all elements necessary to offer local service.
Last mile: The part of the local telecommunications network that connects the central office to the subscriber premises. The last mile typically consists of copper telephone wire.
Central Office: See Wire Center.
Competitive Local Exchange Carrier (CLEC): A public telephone company that provides local telecommunications service in competition with the incumbent local exchange company.