Implications of local loop technology for future industry structure

This chapter explores the impact of the Internet on the deployment of technology for advanced residential network access. The shape of the future is certainly not clear, but certain considerations provide a basis for conjecture: the high cost of new wireline facilities, the emerging ability to provide higher quality Internet service over the existing wireline facilities of the incumbent local exchange carriers (LECs) and cable providers, the rapidly changing nature of the Internet and its service requirements, and the open nature of the Internet's interfaces, which tends to inhibit vertical integration of the Internet and the higher level services provided over it. One possible outcome, considering these factors, is a future in which there is only a limited degree of competition in the provision of residential Internet service, and the degree of actual consumer choice changes rapidly due to the changing nature of the Internet, as well as the investment decisions of the facilities operators. Over the next decade, choice in residential Internet access could be come as much of an issue as choice in local telephone service is today. Research and innovation in alternative modes of residential Internet access might improve the future options for competition.