ther by breaking up the existing monopoly or by facilitating entry by a competitor. Wholesale access, in contrast, leaves the concentrated market intact and instead simply requires that the bot- tleneck resource be shared. Such an approach may be justified if competition is infeasible, as was the case when wholesale access to last-mile broadband networks was first mandated. As the FCC noted, the emergence of competition from alterna- tive broadband technologies essentially renders wholesale access untenable (FCC 2005d). The limited benefits can no longer offset the significant costs and the adverse impact on the incentives to invest in new network capacity. 3. Interconnection Access Interconnection access is provided to horizontal providers competing to serve the same customers, giving them the right to terminate traffic originating on the other network or to have the other network terminate traffic originating on their net- works. Interconnection access is considerably more disruptive to network manage- ment than retail or wholesale access. Impact on demand is ambiguous. Increasing The Regulation of Last-Mile Broadband Networks the number of subscribers increases the value of the network, which in turn can cause network demand to increase. At the same time, interconnection access nec- essarily presumes that some network traffic will originate or terminate on other networks. The resulting diversion of network traffic places downward pressure on network demand. The overall impact of interconnection on network demand is thus ambiguous and depends on which of these two effects dominates. The resulting change in network demand in turn affects the optimal network configuration. Network owners use forecasts of the magnitude, distribution, and variability of demand to design their networks to minimize cost, maximize capacity, and optimize reliability. In the process, the network owner must decide precisely where to place its links and nodes and whether it can aggregate sufficient volume to justify making capital expendi