Monday, February 18, 2013
Posted by D. Daniel Sokol
Michelle P. Connolly, Duke University - Department of Economics and James E. Prieger, Pepperdine University - School of Public Policy describe A Basic Analysis of Entry and Exit in the US Broadband Market, 2005-2008.
ABSTRACT: We conduct a basic analysis of entry and exit in the US broadband market, using a complete FCC census of providers from 2005 to 2008. There is a tremendous amount of (simultaneous) entry and exit in the US broadband market. Most entry is from existing providers expanding into new geographic areas. Entry and exit vary widely across the various modes of provision, which argues against treating broadband as a homogenous service in theoretical or empirical work. The highest entry rates also generally have the highest entrant shares. Entry rates display positive autocorrelation, and the same is true for exit. There is also positive correlation between the entry and exit rates at various leads and lags, suggesting that there are systematic differences among the broadband types in the height of entry and exit barriers. We discuss some implications these results may have for both policy purposes and future work in the broadband market.