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The impact of different fibre access network technologies on cost, competition and welfare

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  • Hoernig, Steffen
  • Jay, Stephan
  • Neumann, Karl-Heinz
  • Peitz, Martin
  • Plückebaum, Thomas
  • Vogelsang, Ingo

Abstract

Using a novel approach to the evaluation of new network technologies that combines an engineering cost model with a differentiated multi-player oligopoly model with wholesale access regulation this article evaluates the choice among different Fibre-to-the-Home (FTTH) architectures. The cost modelling relies upon an engineering bottom-up approach that feeds into a competition model. For addressing competition the pyramid model was chosen, which is an extension of the Hotelling model to multiple firms/services. The paper solves for price setting Nash equilibria between an incumbent, wholesale-access-based entrants and cable as an additional fully integrated network competitor. Welfare tradeoffs are highlighted with respect to cost differences and QoS differences between the various FTTH architectures and between the modes of regulation. According to the analysis architectures that can be unbundled (and that allow for greater speeds) outperform, from a social welfare perspective, architectures that (realistically) allow only for bitstream access.

Suggested Citation

  • Hoernig, Steffen & Jay, Stephan & Neumann, Karl-Heinz & Peitz, Martin & Plückebaum, Thomas & Vogelsang, Ingo, 2012. "The impact of different fibre access network technologies on cost, competition and welfare," Telecommunications Policy, Elsevier, vol. 36(2), pages 96-112.
  • Handle: RePEc:eee:telpol:v:36:y:2012:i:2:p:96-112 DOI: 10.1016/j.telpol.2011.12.003
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    References listed on IDEAS

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    Cited by:

    1. Balmera, Roberto E. & Ünverb, Mehmet Bilal, 2016. "Cooperative investment in next generation broadband networks: A review of recent practical cases and literature," 27th European Regional ITS Conference, Cambridge (UK) 2016 148657, International Telecommunications Society (ITS).
    2. Ricardo GONCALVES & Álvaro NASCIMENTO, 2013. "Next Generation Access Networks: The Post-Investment Conundrum," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(92), pages 91-112, 4th quart.
    3. Balmer, Roberto E., 2015. "Geographic regulation of next generation broadband networks: A review of practical cases and recent literature," 26th European Regional ITS Conference, Madrid 2015 127125, International Telecommunications Society (ITS).
    4. Krämer Jan & Vogelsang Ingo, 2016. "Co-Investments and Tacit Collusion in Regulated Network Industries: Experimental Evidence," Review of Network Economics, De Gruyter, pages 35-61.
    5. Balmer, Roberto E., 2014. "Geographic regulation and cooperative investment in next generation broadband networks," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106889, International Telecommunications Society (ITS).
    6. 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.
    7. Balmer, Roberto E., 2015. "Cooperative investment in next generation broadband networks: A review of recent practical cases and literature," 26th European Regional ITS Conference, Madrid 2015 127124, International Telecommunications Society (ITS).
    8. Steffen Hoernig & Ingo Vogelsang, 2012. "The Ambivalence of Two-Part Tariffs for Bottleneck Access," FEUNL Working Paper Series wp568, Universidade Nova de Lisboa, Faculdade de Economia.
    9. I. Vogelsang, 2015. "Will the U.S. and EU telecommunications policies converge? A survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 117-155, June.
    10. Rendon Schneir, Juan & Xiong, Yupeng, 2013. "Economic implications of a co-investment scheme for FTTH/PON architectures," Telecommunications Policy, Elsevier, vol. 37(10), pages 849-860.
    11. Balmera, Roberto E. & Ünverb, Mehmet Bilal, 2016. "Geographic regulation of next generation broadband networks: A review of practical cases and recent literature," 27th European Regional ITS Conference, Cambridge (UK) 2016 148656, International Telecommunications Society (ITS).
    12. Gallardo, Fernando & Méndez, Mariano & Monjas, Manuel & Sánchez, Fernando, 2015. "Real Options on New Generation Access Networks based on FTTH. An approach to the Spanish Case," 26th European Regional ITS Conference, Madrid 2015 127143, International Telecommunications Society (ITS).

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