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Geographic Access Rules and Investments

TL;DR: In this article, the authors analyze competition between vertically integrated infrastructure operators that provide access in different geographical areas, where a regulator may impose a uniform access price, set local access rates, or deregulate access locally.
Abstract: We analyze competition between vertically integrated infrastructure operators that provide access in different geographical areas. A regulator may impose a uniform access price, set local access rates, or deregulate access locally. We analyze the impact of these alternative regulatory regimes on network investments. While cost-based access leads to both suboptimal rollout and duplication, uniform access prices bring too much duplication. Deregulation in competitive areas can spur investment and lead to social optimum, or call for continued regulatory intervention, depending on the resulting wholesale equilibrium
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Journal ArticleDOI
TL;DR: In this paper, the authors 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.

127 citations

Journal ArticleDOI
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.

42 citations

Journal ArticleDOI
TL;DR: In this article, the adoption of access regimes that differ according to the prevailing degree of infrastructure competition in different geographical areas of a country is analyzed, and it is shown that, compared to a uniform access price, geographically differentiated access prices improve welfare and incentivize investment.

18 citations

Journal ArticleDOI
TL;DR: In this article, the authors compare the optimal access regulation under three different market configurations that approximate the different stages of telecommunications market liberalization and show that in the first stage, the regulator has to balance between static efficiency and investment, while in the second stage, two different outcomes are possible.

15 citations

Journal ArticleDOI
TL;DR: In this article, the impact of regulatory policy on levels of infrastructure deployment and derived welfare in the telecommunications sector is investigated, and it is shown that direct regulation of both investment and price could be the best regulatory remedy.

15 citations

References
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1,016 citations


"Geographic Access Rules and Investm..." refers background in this paper

  • ...The reason is that the access-providing incumbent becomes a less aggressive competitor, which is due to the "fat-cat effect" (Fudenberg and Tirole, 1984) or "softening effect" (Bourreau et al., 2011)....

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Journal ArticleDOI
TL;DR: In this article, the authors study the effects of preemption in games of timing and show that if the gain to preemption is sufficiently small, then the optimal symmetric outcome which involves "late" adoption is an equilibrium.
Abstract: We study the adoption of a new technology to illustrate the effects of preemption in games of timing. We show that the threat of preemption equalizes rents in a duopoly, but that this result does not extend to the general oligopoly game. If the gain to preemption is sufficiently small, then the optimal symmetric outcome, which involves "late" adoption, is an equilibrium. This contrasts with Reinganum's result that in precommitment equilibria there must be "diffusion". We develop a new and richer formalism for modeling games of timing, which permits a continuoustime representation of the limit of discrete-time mixed-strategy equilibria.

938 citations

Posted Content
TL;DR: In this paper, the authors estimate the effect of broadband infrastructure, which enables high-speed internet, on economic growth in the panel of OECD countries in 1996-2007, and find that a 10 percentagepoint increase in broadband penetration raises annual per-capita growth by 0.9-1.5 percentage points.
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.

767 citations


"Geographic Access Rules and Investm..." refers background in this paper

  • ...Investment in broadband infrastructure is receiving extraordinary attention both from governments and regulators all over the world, due to the significant impact of high-speed access on economic growth (Czernich et al. 2011)....

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  • ...Investment in broadband infrastructure is drawing extraordinary attention from governments and regulators all over the world, due to the significant impact of high-speed access networks on economic growth (Czernich et al., 2011). While regulatory intervention must create conditions that encourage (or rather, do not discourage) infrastructure investment, it should at the same time prevent the monopolization of the retail market for high-speed broadband services. The latter calls for some form of regulated access to infrastructures, while the former implies that this should be done with care. An added complication is that competition among high-speed broadband networks is likely to emerge only in specific regions of a country, mostly in very dense metropolitan areas, while in the rest of the country infrastructure competition will probably not materialize. For the least densely populated areas, only government subsidies will make private investment viable. But even in areas covered without the need for public subsidies, the number of operators rolling out their network will differ. Large swathes of the country will most likely be left with only one high-speed network, while urban areas might be covered by two or more. From a regulatory point of view, this calls for ex-ante access rules to vary across areas characterized by different degrees of infrastructure competition. While this is plausible from the point of view of competition law now popular in telecommunications regulation, there is a lack of theoretical research on this type of access regime and its impact on firms’ investment decisions. The aim of this paper is to fill this gap. Our paper is motivated by recent decisions by the European Commission that forcefully push for the adoption of geographically differentiated remedies, or "geographical access rules" as they are referred to by policy makers (see e.g. ERG, 2008).1 The 2009/140/EC Directive ("Better Regu(1)The association of European Telecom Regulators (ERG, 2008) provides a list of criteria to assess the homogeneity of competitive conditions in different geographical markets and to define geographical access remedies. Xavier and Ypsilanti (2011) analyze the practical complexity of geographically segmented regulation....

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  • ...Investment in broadband infrastructure is drawing extraordinary attention from governments and regulators all over the world, due to the significant impact of high-speed access networks on economic growth (Czernich et al., 2011)....

    [...]

Journal ArticleDOI
TL;DR: In this paper, the authors estimate the effect of broadband infrastructure, which enables high-speed internet, on economic growth in the panel of OECD countries in 1996-2007, and find that a 10 percentage point increase in broadband penetration raised annual per capita growth by 0.9-1.5 percentage points.
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 raised 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.

720 citations

Book
01 Jan 1980

392 citations