scispace - formally typeset

Journal ArticleDOI

Access Regulation and the Transition from Copper to Fiber Networks in Telecoms


Abstract: In this paper we study the impact of different forms of access obligations on firms’ incentives to migrate from the legacy copper network to next generation broadband infrastructures. We analyze geographically differential access prices of copper (that depend on whether or not an alternative fiber network has been deployed in the area) and ex-ante access obligations for fiber networks. We discuss how these regulatory schemes fare in addressing the tension among different objectives, such as the promotion of static efficiency, fostering investments in new infrastructures, and avoiding unnecessary duplication of (fiber) networks.

Content maybe subject to copyright    Report

RSCAS 2013/52
Robert Schuman Centre for Advanced Studies
Florence School of Regulation
Access regulation and the transition from copper to
fiber networks in telecoms
Marc Bourreau, Carlo Cambini, Pınar Doğan


European University Institute
Robert Schuman Centre for Advanced Studies
Florence School of Regulation
Access regulation and the transition from copper to fiber
networks in telecoms
Marc Bourreau, Carlo Cambini, Pınar Doğan
EUI Working Paper RSCAS 2013/52

This text may be downloaded only for personal research purposes. Additional reproduction for other
purposes, whether in hard copies or electronically, requires the consent of the author(s), editor(s).
If cited or quoted, reference should be made to the full name of the author(s), editor(s), the title, the
working paper, or other series, the year and the publisher.
ISSN 1028-3625
© Marc Bourreau, Carlo Cambini, Pınar Doğan, 2013
Printed in Italy, July 2013
European University Institute
Badia Fiesolana
I 50014 San Domenico di Fiesole (FI)
Italy
www.eui.eu/RSCAS/Publications/
www.eui.eu
cadmus.eui.eu

Robert Schuman Centre for Advanced Studies
The Robert Schuman Centre for Advanced Studies (RSCAS), created in 1992 and directed by Stefano
Bartolini since September 2006, aims to develop inter-disciplinary and comparative research and to
promote work on the major issues facing the process of integration and European society.
The Centre is home to a large post-doctoral programme and hosts major research programmes and
projects, and a range of working groups and ad hoc initiatives. The research agenda is organised
around a set of core themes and is continuously evolving, reflecting the changing agenda of European
integration and the expanding membership of the European Union.
Details of the research of the Centre can be found on:
http://www.eui.eu/RSCAS/Research/
Research publications take the form of Working Papers, Policy Papers, Distinguished Lectures and
books. Most of these are also available on the RSCAS website:
http://www.eui.eu/RSCAS/Publications/
The EUI and the RSCAS are not responsible for the opinion expressed by the author(s).
Florence School of Regulation
The Florence School of Regulation (FSR) is a partnership between the Robert Schuman Centre for
Advanced Studies (RSCAS) at the European University Institute (EUI), the Council of the European
Energy Regulators (CEER) and the Independent Regulators Group (IRG). Moreover, as part of the
EUI, the FSR works closely with the European Commission.
The objectives of the FSR are to promote informed discussions on key policy issues, through
workshops and seminars, to provide state-of-the-art training for practitioners (from European
Commission, National Regulators and private companies), to produce analytical and empirical
researches about regulated sectors, to network, and to exchange documents and ideas.
At present, its scope is focused on the regulation of Energy (electricity and gas markets), of
Communications & Media, and of Transport.
This series of working papers aims at disseminating the work of scholars and practitioners on current
regulatory issues.
For further information
Florence School of Regulation
Robert Schuman Centre for Advanced Studies
European University Institute
Via Boccaccio, 151
I-50133 Firenze
Tel.: +39 055 4685 751
Fax: +39 055 4685 755
E-mail: fsr@eui.eu
http://www.eui.eu/RSCAS/ProfessionalDevelopment/FSR/

Citations
More filters

Posted Content
Ingo Vogelsang1, Ingo Vogelsang2Institutions (2)
Abstract: Will telecommunications policy in the form of industry-specific regulation go away? A literature review of the five policy areas (1) termination monopoly, (2) local bottleneck access, (3) net neutrality, (4) spectrum management, and (5) universal service suggests that in some of them a move to competition policy will soon be the efficient state of the art, while regulation will remain efficient in others for some time. In particular, some regulation should persist for net neutrality in the form of transparency requirements, (quasi-)common carrier obligations and minimum quality standards. Also, spectrum management will continue to see regulators provide zoning and other services, in particular for unlicensed spectrum.

39 citations


Journal ArticleDOI
Martin Cave1Institutions (1)
Abstract: The ladder of investment was adopted by many European (and other) regulators in the era of copper networks as a means of implementing unbundling in a way which progressively promotes competitive providers' infrastructure investment in fixed networks. The paper reviews the evidence of its application and effects, in comparison with the most likely alternative, argues that it probably conferred benefits. In the more recent era of transition to fibre in Europe, regulatory priorities have shifted towards promoting roll-out. Two broad approaches are identified; one continues the focus on a programme of infrastructure competition in taking fibre to the home; another, relying on fibre to the cabinet, reverses it with bitstream used as the access product. It is soon to evaluate the two approaches. Discusses the nature and effects of use of the ladder of investment in Europe.Examines how this has been changed by the transition to fibre networks.Concludes that there is now greater variety in approaches to broadband regulation.

37 citations


Journal ArticleDOI
Abstract: Our survey reviews the theoretical and empirical literature on all alternative policies to promote the deployment of new fiber-based communications infrastructure Since such investment is expected to induce substantial positive externalities, dynamic efficiency becomes a particularly important policy goal The available policies refer to i) different kinds of ex ante sector-specific regulations including cost-based access regulations as well as softer regulations such as regulatory holidays or geographically differentiated regulations, ii) deregulatory approaches based on effective competition law implementation and competitive market structures including allowance of co-investment models, and iii) public subsidies to cover non-profitable (“white”) areas Our survey identifies the most significant research gaps, finding that numerous studies related to the impact of access regulations exist, whereas only a much smaller branch of literature addresses the impact of competition policies, and even fewer studies analyze the impact of public subsidies on new communications deployment Moreover, our work allows for a generic framework for policy recommendations that identifies the comparative advantages of the individual policy options for different market structures and for varying degrees of externalities We find that public subsidies are the dominant policy alternative in white areas, whereas access regulations can be the preferred policy in white or “grey” areas, where only monopoly structure or co-investment models lead to private investment Deregulatory policies might be preferable in grey areas, if there is sufficient pressure from competitive outside options and if competition law is strong Finally, deregulatory policies including soft regulation are the dominant policy in “black” areas, where several independent infrastructure operators exist

33 citations


Journal ArticleDOI
Laura Abrardi1, Carlo Cambini2Institutions (2)
Abstract: In recent years, and in line with EC plans, telecom operators have been facing the need to deploy high-speed, fiber-based infrastructure. What is the socio-economic impact of these new investments on growth and local development? What are their effects on the labor market outcomes, in terms of firm productivity and entrepreneurship? What is the role of regulation and competition in spurring the deployment and the adoption of ultra-fast broadband networks? In this survey, we review the existing literature on ultra-fast, fiber-based broadband network, devoting special attention to the results and to the methodology used in the most recent studies.

33 citations


Posted Content
Abstract: In this paper we study how the coexistence of access regulations for legacy (copper) and fiber networks shapes the incentives to invest in network infrastructure. To this end, we develop a theoretical model explaining investment incentives by incumbent telecom operators and heterogeneous entrants and test its main predictions using panel data from 27 EU member states over the last decade. Our theoretical model extends the existing literature by, among other things, allowing for heterogeneous entrants in internet access markets, as we consider both other telecom and cable TV operators as entrants. In the empirical part, we use a novel data set including information on physical fiber network investments, legacy network access regulation and recently imposed fiber access regulations. Our main finding is that more stringent access regulations for both the legacy and the fiber networks harm investments by incumbent telecom operators, but, in line with our theoretical model, do not affect cable TV operators.

25 citations


References
More filters

Posted Content

5,886 citations


Posted Content
Abstract: We estimate the effect of broadband infrastructure, which enables high-speed internet, on economic growth in the panel of OECD countries in 1996-2007. Our instrumental-variable model derives its non-linear first stage from a logistic diffusion model where pre-existing voice-telephony and cable-TV networks predict maximum broadband penetration. We find that a 10 percentage-point increase in broadband penetration raises annual per-capita growth by 0.9-1.5 percentage points. Results are robust to country and year fixed effects and controlling for linear second-stage effects of our instruments. We verify that our instruments predict broadband penetration but not diffusion of contemporaneous technologies like mobile telephony and computers.

636 citations


Journal ArticleDOI
Carlo Cambini1, Yanyan JiangInstitutions (1)
Abstract: Investment in broadband communications and its infrastructures (the so-called Next Generation Networks) is receiving extraordinary attention from policy makers all over the world, due to the significant impact of high-speed Internet access on the whole economy and society. However, even before the recent financial crises, a dramatic downward trend in telecommunications investment has occurred, mainly due - at least according to incumbent operators - to excessively intrusive regulatory intervention. The typical conflict between regulation, competition and investment emerges. It is therefore important, for both future research and regulatory and practitioners' references, to review the specialized but growing branch of the literature on this interesting and policy-relevant issue. The purpose of this paper is therefore to survey the relevant theoretical and empirical literature on the relationship between regulation, at both retail and wholesale level, and investment in telecoms infrastructures. The picture that emerges is not conclusive, and further research is still needed, both theoretically and empirically, to better understand the real impact of regulatory incentives on investments.

374 citations


Journal ArticleDOI
Øystein Foros1Institutions (1)
Abstract: We analyse competition between two retailers of broadband access when they differ in their ability to offer value-added services. One retailer is vertically integrated and controls the input-market for local access. This firm invests to increase the input quality (upgrading to broadband) before an access price regulation is set. We first show that access price regulation may lower consumer surplus and welfare if retailers do not differ too much. Second, if the integrated firm’s ability to offer value-added services is much higher than that of the rival, the integrated firm uses overinvestment as an alternative foreclosure tool.

173 citations


Journal ArticleDOI
Marc Bourreau1, Carlo Cambini2, Pinar Dogan3Institutions (3)
Abstract: In this paper, we analyze the incentives of an incumbent and an entrant to migrate from an “old” technology to a “new” technology, and discuss how the terms of wholesale access affect this migration. We show that the coverage of the new technology varies non-monotonically with the access price of the old technology: a higher access charge on the legacy network pushes the entrant firm to invest more, but has an ambiguous effect on the incumbent's investments, due to two conflicting effects: the wholesale revenue effect, and the retail-level migration effect. When the new technology is also subject to access provision, we find that migration from the old to the new generation network at the wholesale level can be incentivized if a positive correlation between the access prices (to the two old and new generation networks) is maintained.

122 citations


Performance
Metrics
No. of citations received by the Paper in previous years
YearCitations
20194
20184
20179
20165
20158
20145