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Do Unbundling Policies Discourage CLEC Facilities-Based Investment

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Author Info

  • Robert W. Crandall
  • Allan T. Ingraham

    (none)

  • Hal J. Singer

    (none)

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    Abstract

    An expanding economics literature has examined the theoretical linkages between mandatory unbundling in the telecommunications sector and the incentives to invest in facilities by both incumbent local carriers and competitive carriers. Recent empirical evidence that substantiates the theory has emerged. That literature documents CLECs’ reluctance to make facilities-based investments instead of availing themselves of incumbents’ UNEs at low regulated prices that are based on total element long-run incremental costs (TELRIC). By examining the variation in facilities-based investment in loops across U.S. states and over time, we find that facilities-based line growth relative to UNE growth was faster in states where the cost of UNEs was higher relative to the cost of facilities-based investment.

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    File URL: http://www.bepress.com/cgi/viewcontent.cgi?article=1136&context=bejeap
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    Bibliographic Info

    Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

    Volume (Year): topics.4 (2004)
    Issue (Month): 1 ()
    Pages: 14

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    Handle: RePEc:bpj:bejeap:v:topics.4:y:2004:i:1:n:14

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    Web page: http://www.degruyter.com

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    Web: http://www.degruyter.com/view/j/bejeap

    Related research

    Keywords: telecommunications; regulation; unbundling;

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    Cited by:
    1. Daniel Montolio & Elisa Trujillo, 2012. "What drives investment in telecommunications? The role of regulation, firms’ internationalization and market knowledge," Working Papers 2012/1, Institut d'Economia de Barcelona (IEB).
    2. Dominguez, Fernando, 2010. "Water scarcity: Can virtual water operators help?," Utilities Policy, Elsevier, vol. 18(3), pages 129-134, September.
    3. Robert S. Pindyck, 2005. "Pricing Capital Under Mandatory Unbundling and Facilities Sharing," NBER Working Papers 11225, National Bureau of Economic Research, Inc.
    4. Marc Bourreau & Pinar Dogan, 2006. ""Build-or-Buy" Strategies in the Local Loop," American Economic Review, American Economic Association, vol. 96(2), pages 72-76, May.
    5. Amitay Alter, 2006. "The Effect of Access Regulation on Broadbnd Deployment," Discussion Papers 06-017, Stanford Institute for Economic Policy Research.
    6. Philip Gayle & Dennis Weisman, 2007. "Are input prices irrelevant for make-or-buy decisions?," Journal of Regulatory Economics, Springer, vol. 32(2), pages 195-207, October.
    7. Alleman, James & Rappoport, Paul, 2005. "Regulatory Failure: Time for a New Policy Paradigm," MPRA Paper 2517, University Library of Munich, Germany.
    8. Baranes, Edmond & Bourreau, Marc, 2005. "An Economist's Guide to Local Loop Unbundling," MPRA Paper 2510, University Library of Munich, Germany.
    9. Filippo Belloc & Antonio Nicita & Maria Alessandra Rossi, 2011. "The Nature, Timing and Impact of Broadband Policies: a Panel Analysis of 30 OECD Countries," Department of Economics University of Siena 615, Department of Economics, University of Siena.
    10. Peter Heinacher & Brigitte Preissl, 2006. "Fibre-optic Networks: On Investment, Regulation and Competition," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 4(3), pages 22-28, October.

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