The Federal Communications Commission has eliminated price caps on broadband service in a county if 50 percent of potential customers live within a half mile of a location served by a competitive provider or if 75 percent of a county’s census blocks have a cable provider. Effectively, the FCC says a local market is competitive even when there is only one broadband provider.

a. What barriers to entry exist in the broadband Internet service market?

b. How can a price cap on broadband service achieve a more efficient outcome?

c. Draw a graph to illustrate the effects of eliminating a price cap in the broadband Internet service market on the price, quantity, total surplus, and deadweight loss.