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Speeding up the internet: Regulation and investment in the European fiber optic infrastructure

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  • Briglauer, Wolfgang
  • Cambini, Carlo
  • Grajek, Michał

Abstract

In this paper, we study how the coexistence of access regulations for legacy (copper) and fiber networks shapes the incentives to invest in fiber-based network infrastructures. To this end, we first develop a theoretical model that extends the existing literature by, among other things, considering alternative firms with proprietary legacy network (e.g., cable operators) and the presence of asymmetric mandated access to networks. In the empirical part, we test the theoretical predictions using a novel panel data from 27 EU member states pertaining to the last decade. Our main finding is that, in line with the theoretical results, stricter access regulations (i.e., a decrease in access price to legacy network and the adoption of fiber regulation) decrease the incumbent operators’ fiber investments. On the other hand, cable operators are not affected by access regulation. Our paper thus provides policy insights for the on-going revision of the EU regulation framework for the electronic communications industry.

Suggested Citation

  • Briglauer, Wolfgang & Cambini, Carlo & Grajek, Michał, 2018. "Speeding up the internet: Regulation and investment in the European fiber optic infrastructure," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 613-652.
    • Handle: RePEc:eee:indorg:v:61:y:2018:i:c:p:613-652
    DOI: 10.1016/j.ijindorg.2018.01.006
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    More about this item

    Keywords

    Access regulation; Infrastructure investment; Next generation networks; Broadband; Cable operators and EU regulatory framework;
    All these keywords.

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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