Author: Jinki Kim

Publisher:

Published: 2012

Total Pages: 0

ISBN-13:

Internet protocol television (IPTV) has appeared as a competitor of cable television in the multi-channel video programming distributor (MVPD) market. The IPTV is the last component for telecom carriers who want to provide their customers with triple play services (TPS). Cable television operators already have the capability to provide TPS on their cable networks. In order to provide multi-channel video programs, a carrier should have been granted a franchise from a local government in the United States. The local franchising mechanism becomes an issue for delaying service launching, hampering fair competition, and leading to inefficient resource allocation by carriers. As an alternative mechanism, state-level franchising mechanism has been suggested. It is expected that the state-level franchising mechanism will shorten the launching period, improve competition in the MVPD market, and as a result, increase the consumer's welfare. In this regard, this study proposes a new approach to estimate the consumer's economic benefits from the changing the MVPD franchising mechanism from the local-level to the state-level. Based on an economic perspective, the IPTV diffusion patterns are estimated by using the Bass (1969) diffusion model. The diffusion model is used to estimate the IPTV demands at the state-level franchising mechanism as well as that of the local-level franchising mechanism. An estimate of the consumer's economic benefit is based on the difference between demands on the state-level versus that of the local-level franchising mechanism. Results show that the state-level mechanism will grant consumers economic benefits of around 5.8 billion dollars in ten years. This result will encourage regulators and legislators to consider a state-level mechanism as a viable option for improving competition in the MVPD market and subsequently will increase consumer's welfare.