The Institutional Conditions for Technological Change: Fiber to the Home

Telephone companies are attempting to upgrade the cord that ties each household to the public switched network. The new cord could be a fiber optic cable. In order to bring the alleged benefits of this new technology to the public, the telephone companies are attempting to secure a release from the legal restrictions that limit their involvement in the video industry. Cable television is also evolving toward a fiber environment. Cable TV companies are reinforcing coaxial systems with fiber backbones, which will enhance the 2-way communications abilities of cable systems. Thus, the technical evolution of the distribution systems appears to be bringing these 2 industries into direct competition. If the goal is to establish a competitive video distribution market that includes the telephone companies, the current legal and regulatory environment must be altered. Reinvestment of the legitimacy of public utility regulation could be the efficient path to technological progress.