ital convergence opens up the policy space in important ways and undercuts many of the classic bases for regulation. In addition, the increased importance on investment incentives, the complexity of the relevant interfaces, and the rapid pace of technological change also effect fundamental changes to the policy analysis. 1. Natural Monopoly The FCC has noted, "At the time the Computer Inquiryrules were adopted, there was an implicit, if not explicit, assumption that the incumbent wireline platform would remain the only network platform available to enhanced service providers" (FCC 2005d, p. 14877).2 24 In short, previous regulation mandating access to last-mile broadband services was based largely on the presumption that last-mile broadband services constituted a natural monopoly. Scholars have long debated whether local telephone companies or local cable operators have represented intramodal natural monopolies. The debate over whether local telephone service represented a natural monopoly is discussed in Chapter 8 and will not be reviewed here. A similar disagreement exists with respect to cable television. Because local distribution of cable programming required the deployment of a network of wires as extensive as that required to establish local telephone service, it too was generally regarded as a natural monopoly. 25 This led municipal and federal regulators to impose rate regulation, entry restrictions, access obligations, and a wide variety of other regulations (Brenner 1990). The Justice Department justified its decision not to oppose mergers between competing cable systems by its conclusion that cable was a natural monopoly (U.S. Depart- ment of Justice 1985, quoted in Manishin 1987, p. 87). Courts have also invoked the natural monopoly rationale when sustaining cable regulations against a variety of legal challenges. 26 Other scholars have questioned whether the cost functions of the cable industry exhibited sufficient natural monopoly characteristics to justify entry restrictions and 24 See also Brand 