The momentum for network separation: a guide for regulators
AbstractNGAs (Next Generation Access Networks) are a challenge to regulators and operators insofar as they require large investments, there is significant uncertainty about the ability to recover costs, and the choice of the appropriate regulatory regime is far from consensual. Regulatory authorities might want to seize the moment and reconsider the mandatory vertical separation of telecommunication firms, without jeopardizing incentives to innovation, investment and welfare. We provide a provocative but simple test for the adequacy of network separation as a regulatory remedy. We propose a decision tree procedure with four steps in order to assess whether network separation is an adequate regulatory response:  “Is there significant market power in the market for the provision of access services under NGAs?”;  “Are there few vertical complementarities between services along the supply chain?”;  “Is functional separation a better regulatory tool than any other alternative?”; and  “Is structural separation superior to functional separation?”. A positive answer to the first three questions implies that the regulator should consider functional network separation, whilst the fourth is needed for the structural alternative.
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Bibliographic InfoPaper provided by Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto) in its series Working Papers de Economia (Economics Working Papers) with number 03.
Length: 11 pages
Date of creation: Jan 2009
Date of revision:
Telecommunications networks; Functional separation; Structural separation;
Other versions of this item:
- Gonçalves, Ricardo & Nascimento, Álvaro, 2010. "The momentum for network separation: A guide for regulators," Telecommunications Policy, Elsevier, vol. 34(7), pages 355-365, August.
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-17 (All new papers)
- NEP-MIC-2009-01-17 (Microeconomics)
- NEP-NET-2009-01-17 (Network Economics)
- NEP-REG-2009-01-17 (Regulation)
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