The Handbook of Telecommunications Economics, Vol. II

Broadband Communications

Preliminary Draft Only


Communications technologies that provide high-speed, always-on connections to the Internet for large numbers of residential and small-business subscribers are commonly referred to as "broadband" technologies. High-speed is an imprecise term—it simply means much faster than dial-up connections. A dial-up connection, using a 56-kbit/second modem, typically transfers data at about 40 Kb/s. The U.S. Federal Communications Commission (2000) defines high speed as a connection that provides at least 200 kb/s in one direction. Much higher speeds are generally available in modern digital subscriber line (DSL) or cable modem services. Always-on refers to an Internet connection that is immediately available to the user and does not require that he (or she) log on to the service for each use. With an always-on or always-available connection, the delay from the time that a user goes to the computer and clicks on a web page icon to the time when the request for information is delivered to the remote server is measured in milliseconds.

In this chapter, I review the literature on the development of mass-market broadband services for residential and small-business subscribers. I specifically exclude any discussion of traditional high-speed services for medium and large businesses, such as DS-1 or DS-3 services, or various high-speed packet-switched services, such as frame relay. Nor do I include any discussion of "special access" or "leased lines" that are used by large businesses or long distance carriers to originate or terminate large numbers of voice/data calls.