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Unbundling the incumbent: Evidence from UK broadband

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  • Nardotto, Mattia
  • Valletti, Tommaso
  • Verboven, Frank

Abstract

We consider the impact of a regulatory process forcing an incumbent telecom operator to make its local broadband network available to other companies (local loop unbundling, or LLU). Entrants are then able to upgrade their individual lines and offer Internet services directly to customers. Employing a very detailed dataset covering the whole of the UK, we find that over the course of time, many entrants have begun to take advantage of LLU. However, unbundling has little or no effect on broadband penetration, compared to those areas where the loops are not unbundled. LLU entry instead has a strongly positive impact on the quality of the service provided. We also assess the impact of competition from an alternative form of technology (cable) which is not subject to regulation, and what we discover is that inter-platform competition has a positive impact on both penetration and quality.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9194.

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Date of creation: Oct 2012
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Handle: RePEc:cpr:ceprdp:9194

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Related research

Keywords: broadband; competition; entry; local loop unbundling; regulation; telecommunications;

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Cited by:
  1. Ingo Vogelsang, 2014. "Will the U.S. and EU Telecommunications Policies Converge? A Survey," CESifo Working Paper Series 4843, CESifo Group Munich.
  2. Joan Calzada & Fernando Martínez, 2013. "“Broadband prices in the European Union: competition and commercial strategies”," IREA Working Papers 201309, University of Barcelona, Research Institute of Applied Economics, revised May 2013.
  3. Nadine Fabritz & Oliver Falck, 2013. "Investment in Broadband Infrastructure Under Local Deregulation: Evidence from the U.K. Broadband Market," CESifo Working Paper Series 4277, CESifo Group Munich.
  4. Pier Luigi Parcu, 2013. "Electronic Communications Regulation in Europe: An Overview of Past and Future Problems," RSCAS Working Papers 2013/92, European University Institute.
  5. Laura Nurski, 2012. "Net Neutrality, Foreclosure and the Fast Lane: An empirical study of the UK," Working Papers 12-13, NET Institute.
  6. Daniel Montolio & Francesc Trillas & Elisa Trujillo-Baute, 2014. "Regulatory environment and firm performance in EU telecommunications services," Working Papers 2014/15, Institut d'Economia de Barcelona (IEB).
  7. Ingo Vogelsang, 2013. "The Endgame of Telecommunications Policy? A Survey," CESifo Working Paper Series 4545, CESifo Group Munich.
  8. Balmer, Roberto, 2013. "Competition and Market Strategies in the Swiss Fixed Telephony Market. An estimation of Swisscom’s dynamic residual demand curve," MPRA Paper 54078, University Library of Munich, Germany.
  9. Cambini, Carlo & Silvestri, Virginia, 2012. "Technology investment and alternative regulatory regimes with demand uncertainty," Information Economics and Policy, Elsevier, vol. 24(3), pages 212-230.
  10. Maya Bacache & Marc Bourreau & Germain Gaudin, 2014. "Dynamic Entry and Investment in New Infrastructures: Empirical Evidence from the Fixed Broadband Industry," Review of Industrial Organization, Springer, vol. 44(2), pages 179-209, March.

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