Phoenix Center Policy Paper Number 41: Wobbling Back to the Fire: Economic Efficiency and the Creation of a Retail Market for S
PHOENIX CENTER POLICY PAPER SERIES Phoenix Center Policy Paper Number 41: Wobbling Back to the Fire: Economic Efficiency and the Creation of a Retail Market for Set-Top Boxes T. Randolph Beard, PhD George S. Ford, PhD Lawrence J. Spiwak, Esq. Michael Stern, PhD (December 2010) © Phoenix Center for Advanced Legal and Economic Public Policy Studies, T. Randolph Beard, George S. Ford, Lawrence J. Spiwak and Michael Stern (2010). Phoenix Center Policy Paper No. 41 Wobbling Back to the Fire: Economic Efficiency and the Creation of a Retail Market for Set-Top Boxes T. Randolph Beard, PhD George S. Ford, PhD† Lawrence J. Spiwak, Esq.‡ Michael Stern, PhD (© Phoenix Center for Advanced Legal & Economic Public Policy Studies, T. Randolph Beard, George S. Ford, Lawrence J. Spiwak and Michael Stern (2010).) Abstract: Under Section 629 of the Communications Act, Congress directed the FCC to adopt regulations to promote a retail market for set-top boxes. The Commission’s first attempt was the ill-fated CableCard experiment, which—by the Commission’s own admission—was a dismal failure. In response, the Commission is now contemplating an aggressive new “AllVid” regime, whereby the agency would mandate multichannel video program distributors (“MVPDs”) to provide an adapter to serve as a “common interface for connection to televisions, DVRs, and other smart video devices.” Because the FCC is again proceeding without any formal economic analysis of the nature of the service-equipment relationship in the MVPD market, we do so here and our findings are significant. First, our theoretical analysis reveals that the set-top box conveys no additional market power to the MVPD.
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