| Abstract: | Many cable television operators routinely refuse to run localDSL advertising on their cable systems. Given that such conductreduces the advertising profits of cable companies, a plausiblepurpose for such discriminatory refusals to deal is to limittheir cable customers' information about competitive alternativesto their cable modem services. By banning local DSL advertisementsplaced on cable television, a cable television operator foreclosesequally efficient rivals (DSL providers) in the broadband Internetaccess market from the most efficient form of advertising abroadband product (television advertising), as I prove here,and thereby impairs rivals' efficiency. To the extent that DSLproviders cannot compete as effectively as they would in theabsence of the ban, the ban allows cable television operatorsto raise the price of cable modem service and thereby reduceconsumer welfare. Using a traditional antitrust analysis, Ipresent evidence that local television advertising can be aseparate product market (when it comes to marketing DSL), andthat cable television providers have market power in that advertisingmarket. I also present evidence that local television advertisingon cable networks is the most efficient form of advertisingfor DSL providers. The potential anticompetitive effect of cable'sban on DSL advertising is to relegate DSL advertising to lessefficient marketing channels, thereby allowing cable operatorsto charge higher prices for cable modem service. Such conductthus raises obvious antitrust issues. |
