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Journal Article•DOI•

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

Marc Bourreau1, Carlo Cambini2, Carlo Cambini3, Pinar Dogan4•
Télécom ParisTech1, Polytechnic University of Turin2, European University Institute3, Harvard University4
08 Oct 2013-Social Science Research Network-
TL;DR: In this paper, the impact of different forms of access obligations on firms' incentives to migrate from the legacy copper network to next generation broadband infrastructures is studied, where the authors analyze geographically differential access prices of copper (that depend on whether or not an alternative fiber network has been deployed in the area).
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.

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  • 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.
  • The EUI and the RSCAS are not responsible for the opinion expressed by the author(s).

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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
Journal Article•DOI•
Ultra-fast broadband investment and adoption: A survey

[...]

Laura Abrardi1, Carlo Cambini2•
Polytechnic University of Turin1, European University Institute2
01 Apr 2019-Telecommunications Policy
TL;DR: In this paper, the authors 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.

47 citations

Posted Content•
The Endgame of Telecommunications Policy? A Survey

[...]

Ingo Vogelsang1, Ingo Vogelsang2•
Boston University1, Ifo Institute for Economic Research2
31 Dec 2013-Social Science Research Network
TL;DR: 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 as mentioned in this paper.
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.

40 citations

Journal Article•DOI•
The ladder of investment in Europe, in retrospect and prospect

[...]

Martin Cave1•
Imperial College London1
01 Sep 2014-Telecommunications Policy
TL;DR: 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 as mentioned in this paper.

38 citations

Journal Article•DOI•
The Impact of Alternative Public Policies on the Deployment of New Communications Infrastructure – A Survey

[...]

Wolfgang Briglauer, Stefan Frübing, Ingo Vogelsang1, Ingo Vogelsang2•
Boston University1, Ifo Institute for Economic Research2
12 Jan 2015-Social Science Research Network
TL;DR: In this paper, a survey of the theoretical and empirical literature on all alternative policies to promote the deployment of new fiber-based communications infrastructure is presented, where the available policies refer to 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.
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

35 citations

Journal Article•DOI•
Strategic formation and welfare effects of airline-high speed rail agreements

[...]

Alessandro Avenali1, Valentina Bracaglia, Tiziana D'Alfonso1, Pierfrancesco Reverberi1•
Sapienza University of Rome1
01 Nov 2018-Transportation Research Part B-methodological
TL;DR: In this article, the authors study the strategic formation of airline-high speed rail (HSR) partnerships and their effects on consumer surplus and social welfare, and provide antitrust authorities with a simple two-tier test for the capacity purchase (CP) agreement to improve consumer surplus.
Abstract: Policy makers encourage airline-high speed rail (HSR) cooperation to promote intermodal passenger transport. We study the strategic formation of airline-HSR partnerships (depending on sunk costs and firms’ bargaining power) and their effects on consumer surplus and social welfare. We assume that airline-HSR agreements serve to offer a bundle of domestic HSR and international air services. In a capacity purchase (CP) agreement, the airline buys train seats to sell the bundle, whereas in a joint venture (JV) agreement firms create a distinct business unit. We find that both agreements increase traffic in the network, and thereby may not reduce congestion at hub airports. We provide antitrust authorities with a simple two-tier test for the CP agreement to improve consumer surplus. Contrary to airline-HSR mergers, the JV agreement benefits consumers independent of hub congestion and mode substitution. Simulation results show that, in case of cooperation, public agencies should prefer firms to create a JV, unless the related sunk costs are far greater than the costs of the CP agreement.

29 citations

References
More filters
Journal Article•DOI•
Access price regulation, investment and entry in telecommunications

[...]

Kaisa Kotakorpi1•
University of Tampere1
01 Sep 2006-International Journal of Industrial Organization
TL;DR: In this article, the authors consider a model with a vertically integrated monopolist network provider who faces rival operators in the retail market, and examine the network operator's incentives for infrastructure investment.

123 citations

Posted Content•
Universal Service and Entry: The Role of Uniform Pricing and Coverage Constraints

[...]

Tommaso Valletti1, Tommaso Valletti2, Steffen Hoernig3, Pedro Pita Barros3•
Imperial College London1, Economic Policy Institute2, Universidade Nova de Lisboa3
01 May 2001-Social Science Research Network
TL;DR: In this article, the authors consider various policy instruments, such as constraints on pricing and coverage, and show that these are not competitively neutral and may have far-reaching strategic effects.
Abstract: Universal service objectives are pervasive in telecommunications, and have gained new relevance after liberalization and the introduction of competition in many markets Despite their policy relevance, little work has been done allowing for a thorough discussion of instruments designed to achieve universal service objectives under competition We intend to fill this gap, and consider various policy instruments, such as constraints on pricing and coverage It is shown that these are not competitively neutral and may have far-reaching strategic effects Equilibrium coverage of both incumbent and entrant may be lower than without regulation, and firms may even (noncooperatively) leave each others' markets to lessen competitive pressure in their remaining markets These effects depend on which measures are imposed at the same time, thus no single measure can be evaluated in isolation We also point out that different groups of consumers are affected in different ways, making welfare comparisons difficult

117 citations

Journal Article•DOI•
Regulating Private Infrastructure Investment: Optimal Pricing for Access to Essential Facilities

[...]

Joshua S. Gans1•
Melbourne Business School1
01 Sep 2001-Journal of Regulatory Economics
TL;DR: In this paper, the authors analyze optimal pricing for access to essential facilities in a competitive environment and show that the fixed component of a regulated access price can be structured so as to induce a race between market participants to provide the infrastructure.
Abstract: This paper analyzes optimal pricing for access to essential facilities in a competitive environment. The focus is on investment incentive issues arising from regulation under complete information. To that end, examining the provision of a natural monopoly infrastructure with unlimited capacity, it is shown that the fixed component of a regulated access price can be structured so as to induce a “race” between market participants to provide the infrastructure. An appropriate pricing formula can ensure that a single firm chooses to invest at the socially optimal time (taking into account producer and consumer surplus) despite the immediate access granted to rivals and the non-existence of government subsidies. Under the optimal pricing formula, firms choose their investment timing based on their desire to pre-empt their rivals. This pricing formula is efficient (a two part tariff), implementable ex post, and robust to alternative methods of asset valuation (replacement or historical cost). When firms are not identical, the access pricing formula resembles, in equilibrium, a fully distributed cost methodology.

112 citations

Journal Article•DOI•
Access pricing and investment with stochastically growing demand

[...]

Keiichi Hori1, Keizo Mizuno2•
Ritsumeikan University1, Kwansei Gakuin University2
01 Jul 2006-International Journal of Industrial Organization
TL;DR: In this article, the effect of access charges on firms' incentives to invest in a network facility with a stochastically growing demand is examined, and an access-to-bypass equilibrium is characterized in terms of an access charge and a level of network investment cost.

89 citations

Posted Content•
"Build or Buy" Strategies in the Local Loop

[...]

Pinar Dogan, Marc Bourreau
01 Oct 2005-Research Papers in Economics
TL;DR: In this article, the authors provide a dynamic model to study how the presence of the option to "buy" the incumbent local exchange carrier's (ILEC) facilities via local loop unbundling affects the competitive local exchange carriers' (CLECs) incentives to "build" alternative infrastructures.
Abstract: We provide a dynamic model to study how the presence of the option to "buy" the incumbent local exchange carrier's (ILEC) facilities via local loop unbundling affects the competitive local exchange carriers' (CLECs) incentives to "build" alternative infrastructures. We show that an unregulated incumbent sets a rental path for its local loop which delays technology adoption compared to the case in which there is no unbundling. We also characterize the equilibrium rental path set by the unregulated incumbent; it is prohibitively high at the initial phases when there is no effective threat of entry with alternative technologies, and it is decreasing over time in later phases. The decrease in the rental price follows the rise of the entrant's opportunity cost of leasing lines. We also argue that neither allowing higher prices for unbundled elements over time nor setting a sunset clause would suffice to induce facility-based competition. By studying the unregulated ILECs decision regarding unbundling, we challenge the implicit assumption behind the sunset clauses, which is that the ILEC would either deny unbundling or charge too high a price for its network elements in the absence of regulation. We claim that the ILECs that initially resist unbundling requirements would tend to charge attractive access prices (relative to the entrants' alternatives) for their infrastructure, which become less essential over time.

77 citations

Related Papers (5)
Access regulation and the transition from copper to fiber networks in telecoms

[...]

20 Feb 2014-Journal of Regulatory Economics
Marc Bourreau, Carlo Cambini, Pinar Dogan
Dynamic access pricing and investment in alternative infrastructures

[...]

01 Mar 2010-International Journal of Industrial Organization
Alessandro Avenali, Giorgio Matteucci, Pierfrancesco Reverberi
Geographic Access Rules and Investments

[...]

01 Jun 2012-Social Science Research Network
Marc Bourreau, Carlo Cambini, Carlo Cambini, Steffen Hoernig 
Unbundling and infrastructure competition for broadband adoption

[...]

01 Sep 2014-Telecommunications Policy
Chatchai Kongaut, Erik Bohlin
Strategic choice of financing systems in regulated and interconnected industries

[...]

01 Feb 2005-Journal of Public Economics
Anna Bassanini, Jerome Pouyet
Frequently Asked Questions (6)
Q1. What are the objectives of the Robert Schuman Centre for Advanced Studies?

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. 

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 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. 

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/ aa w~0.400 a 0.1 0.2 0.3 0.40.200.300.100.00 

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.