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Access Pricing, Competition, and Incentives to Migrate From "Old" to "New" Technology

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  • Bourreau, Marc
  • Cambini, Carlo
  • Dogan, Pinar

Abstract

In this paper, we 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. We show that a higher access charge on the legacy network pushes the entrant firm to invest more, but has an ambiguous effect on the incumbent's investments, due to two conflicting effects: the wholesale revenue effect, and the business migration effect. If both the old and the new infrastructures are subject to ex-ante access regulation, we also find that the two access charges are positively correlated.

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Bibliographic Info

Paper provided by Harvard Kennedy School of Government in its series Scholarly Articles with number 5098425.

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Date of creation: 2011
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Publication status: Published in HKS Faculty Research Working Paper Series
Handle: RePEc:hrv:hksfac:5098425

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References

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  1. Duarte Brito & Pedro Pereira & João Vareda, 2008. "Can Two-Part Tariffs Promote Efficient Investment on Next Generation Networks?," Working Papers 34, Portuguese Competition Authority.
  2. Bourreau, Marc & Dogan, Pinar, 2005. "Unbundling the local loop," European Economic Review, Elsevier, vol. 49(1), pages 173-199, January.
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  5. Graeme Guthrie, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 925-972, December.
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  7. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  8. M. Bourreau & C. Cambini & P. Dogan, . "Access Pricing, Competition, and Incentives to Migrate From "Old" to "New" Technology," Working Paper 36919, Harvard University OpenScholar.
  9. Nina Czernich & Oliver Falck & Tobias Kretschmer & Ludger Woessmann, 2009. "Broadband Infrastructure and Economic Growth," CESifo Working Paper Series 2861, CESifo Group Munich.
  10. Gans, Joshua S & Williams, Philip L, 1999. "Access Regulation and the Timing of Infrastructure Investment," The Economic Record, The Economic Society of Australia, vol. 75(229), pages 127-37, June.
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Citations

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Cited by:
  1. Martin CAVE & Antoine FOURNIER & Natalia SHUTOVA, 2012. "The Price of Copper and the Transition to Fibre," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(85), pages 147-168, 1st quart.
  2. Marc Bourreau & Carlo Cambini & Pınar Doğan, 2014. "Access regulation and the transition from copper to fiber networks in telecoms," Journal of Regulatory Economics, Springer, vol. 45(3), pages 233-258, June.
  3. Bourreau, Marc & Cambini, Carlo & Hoernig, Steffen, 2012. "Geographic Access Rules and Investments," CEPR Discussion Papers 9013, C.E.P.R. Discussion Papers.
  4. Jaunaux, Laure & Lebourges, Marc, 2013. "Economic replicability tests for next-generation access networks," 24th European Regional ITS Conference, Florence 2013 88501, International Telecommunications Society (ITS).
  5. Tselekounis, Markos & Xylogianni, Eirini & Varoutas, Dimitris & Martakos, Drakoulis, 2013. "Geographically differentiated NGA deployment," 24th European Regional ITS Conference, Florence 2013 88533, International Telecommunications Society (ITS).
  6. M. Bourreau & C. Cambini & P. Dogan, . "Access Pricing, Competition, and Incentives to Migrate From "Old" to "New" Technology," Working Paper 36919, Harvard University OpenScholar.
  7. Parcu, Pier Luigi & Silvestri, Virginia, 2013. "Electronic communications regulation in Europe: An overview of past and future problems," 24th European Regional ITS Conference, Florence 2013 88509, International Telecommunications Society (ITS).
  8. Brito, Duarte & Pereira, Pedro & Vareda, João, 2012. "Incentives to invest and to give access to non-regulated new technologies," Information Economics and Policy, Elsevier, vol. 24(3), pages 197-211.
  9. Pier Luigi Parcu, 2013. "Electronic Communications Regulation in Europe: An Overview of Past and Future Problems," RSCAS Working Papers 2013/92, European University Institute.
  10. Balmer, Roberto, 2013. "Geographic Regulation and Cooperative Investment in Next Generation Broadband Networks - A Review of Recent Literature and Practical Cases," MPRA Paper 54080, University Library of Munich, Germany.
  11. Inderst, Roman & Peitz, Martin, 2014. "Investment under uncertainty and regulation of new access networks," Information Economics and Policy, Elsevier, vol. 26(C), pages 28-41.
  12. Ingo Vogelsang, 2013. "The Endgame of Telecommunications Policy? A Survey," CESifo Working Paper Series 4545, CESifo Group Munich.
  13. Christian Bender, 2011. "How to provide access to next generation networks? The effect of risk allocation on investment and cooperation incentives," MAGKS Papers on Economics 201149, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  14. Neumann, Karl-Heinz & Vogelsang, Ingo, 2013. "How to price the unbundled local loop in the transition from copper to fiber access networks?," 24th European Regional ITS Conference, Florence 2013 88516, International Telecommunications Society (ITS).
  15. Inderst, Roman & Peitz, Martin, 2012. "Network Investment, Access and Competition," MPRA Paper 53842, University Library of Munich, Germany.

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