Designing markets that work

Reason discusses how differences in regulation have allowed the broadband access available to consumers in the US to now supercede those of Europe - particularly interesting given how it wasn't so long ago pundits were bemoaning the US's 'moribund' level of competition versus that of Europe:

Meanwhile, Europe’s broadband speeds have remained stagnant. Broadband companies in the U.S. are installing advanced fiber-optic technology faster than Europe, according to a recent study by the Information Technology and Innovation Foundation. That likely ensures that the gap will continue to widen.

Indeed, it’s the willingness of telecom companies to invest in new infrastructure that ensures broadband growth. In the U.S. we enjoy what’s known as “facilities-based competition,” which means that broadband providers own their network and compete with each other based on improvements to their facilities. In most of Europe, by contrast, broadband providers lease access to the network from the local phone company at fixed rates. That may mean a greater number of competitors, but also little incentive to improve the network facility.

As the White House report noted, just two U.S. telecommunications companies—AT&T and Verizon—“account for greater combined stateside investment than the top five oil/gas companies, and nearly four times more than the big three auto companies combined.” If companies thought they would be forced to lease their networks to rivals at regulated rates, it’s doubtful they’d make such investments.

Developing markets has been somewhat top of mind at the moment as I've recently summarized a book (Scribd) Making Markets (Amazon). I'd highly recommend the book to anyone who is interested in how to build, analyze and design markets.