Measuring Incumbent ISP Response to Municipal Broadband Opt-out Referenda in Colorado
Deploying municipally-run broadband Internet to deliver high-speed access to residents is an increasingly popular idea among local communities that are concerned that their current Internet offerings are substandard or otherwise uncompetitive. These public networks often operate alongside private incumbent networks and might have substantial effects on the competitive landscape. Many states have passed restrictions on how local communities can offer service. Colorado law prevents a city or county from offering service unless a referendum is passed. Since 2005, voters in over 140 local jurisdictions, including half of Colorado’s counties, have voted to approve bypassing the state prohibition. So far only one city has launched a network.
This research design exploits variation in the timing of a community’s approval of the referendum to see if incumbent private ISPs adjust their speed offerings (a proxy for quality) in response to the signal (referendum passing) that public entry is more likely. It is possible to utilize a difference-in-difference framework to see if, over the period 2012 to 2018, incumbent upgrades in quality are faster or slower depending on whether they face a greater public entry threat. Faster upgrades could suggest that incumbents do so to deter an entry threat or that potential competition could be quality-enhancing. Slower upgrades could suggest that public entry threats crowd out investment in quality. These effects might be amplified if they are in communities with an existing municipal electric utility, which arguably makes entry more likely.
Business | Economics
Landgraf , S. (2020). Measuring Incumbent ISP Response to Municipal Broadband Opt-out Referenda in Colorado. .