igh speeds and allow entry and exit only through limited access points. Middle-mile networks are the divided highways that connect interstate exits to local roads. Last-mile networks are the local roads responsible for delivering traffic to the driveways leading into individual residences (FCC 2000e). Until recently, the protocols that govern the Internet have required that all of these providers be organized into a series of parallel hierarchies, in which each last- mile provider exchanged traffic with a dedicated middle-mile provider, which in turn exchanged traffic with a dedicated backbone (Besen et al. 2001). Each type of Internet provider in this chain must maintain some infrastructure for conveying the stream of data packets, consisting of wires, fiber optic cable, or some other medium of transmission. Each network must also have a number of computers called routers, which operate in the core of the network to direct packets to their destinations. Computers that store files at the edge of the network and fulfill requests for those files from other users are called servers. The process can be illustrated by tracing the path of a typical Internet trans- action, such as downloading a Web page over a cable modem system. The process begins when an end user employs its computer to submit a request for a Web page. The end user's computer divides the address of the requested Web page into packets and forwards the packets to the cable modem provider serving that end user. The packets travel through the coaxial cables connecting the end user's premises to a fiber node located in its neighborhood, which aggregates those packets with other traffic and transmits them to the headend. A cable modem termination system separates the data packets from the video stream and directs them onto the data network maintained at the headend. The router on the data network located at the headend transmits the packets to a middle-mile provider, which in turn transmits the packets to one of the interconnection points served by backbone