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The Impact on Broadband Access to the Internet of the Dual Ownership of Telephone and Cable Networks

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  • Pedro Pereira

    ()
    (Autoridade da Concorrencia, Portugal)

  • Tiago Ribeiro

    ()
    (Indera)

Abstract

In Portugal, the telecommunications incumbent o®ers broadband access to the Inter- net, both through digital subscriber line and cable modem. In this article, we estimate the impact on broadband access to the Internet of the structural separation of these two businesses. We use a panel of consumer level data and a discrete choice model to estimate the price elasticities of demand and the marginal costs of broadband access to the Internet. Based on these estimates, we simulate the e®ect on prices and social welfare of the structural separation. Our results indicate that the structural separation would lead to substantial price reductions. For broadband clients, on average, each household would save 3:37 euros per month, or 14% of the current price levels. Overall, on average, each household would save 2:73 euros per month, or 14% of the current price levels. We test the robustness of our results in terms of: (i) the estimates of the demand elasticities, (ii) the strategic behavior of the ¯rms, and (iii) the market share estimates. There is no evidence of collusion.

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File URL: http://www.netinst.org/Pereira-Ribeiro.pdf
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Bibliographic Info

Paper provided by NET Institute in its series Working Papers with number 06-10.

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Length: 41 pages
Date of creation: Aug 2006
Date of revision: Aug 2006
Handle: RePEc:net:wpaper:0610

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Web page: http://www.NETinst.org/

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Keywords: Broadband; Structural Separation; Prices;

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Cited by:
  1. Duarte Brito & Pedro Pereira & Joaquim Ramalho, 2013. "Mergers, Coordinated Effects and Efficiency in the Portuguese Non-Life Insurance Industry," CEFAGE-UE Working Papers 2013_18, University of Evora, CEFAGE-UE (Portugal).
  2. Zucchini, Leon & Claussen, Jörg & Trüg, Moritz, 2013. "Tariff-Mediated Network Effects versus Strategic Discounting: Evidence from German Mobile Telecommunications," Discussion Papers in Business Administration 14848, University of Munich, Munich School of Management.
  3. Lukasz Grzybowski & Pedro Pereira, 2006. "Simulation of Merger in Mobile Telephony in Portugal," Working Papers 06-22, NET Institute, revised Oct 2006.
  4. Pereira, Pedro & Ribeiro, Tiago & Vareda, João, 2013. "Delineating markets for bundles with consumer level data: The case of triple-play," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 760-773.

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