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Facility- and service-based competition and investment in fixed broadband networks: Lessons from a decade of access regulations in the European Union member states

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  • Briglauer, Wolfgang
  • Gugler, Klaus
  • Haxhimusa, Adhurim

Abstract

This paper employs firm-level panel data of 57 incumbent and entrant firms for 23 European countries in the decade from 2003 to 2012. We examine the impact of service- and facility-based competition on firm-level investment as well as the strategic effects underlying infrastructure investment decisions. At the same time we explicitly model the structural dynamics of broadband investment by means of a flexible accelerator model. The empirical specification employs dynamic panel estimation techniques which allow us to account for various sources of endogeneity. We find that facility-based competition exerts a positive and significant impact on both incumbents and entrants implying that incumbents’ and entrants’ investment decisions are strategic complements. Moreover, we find that intermodal competition in terms of fixed-mobile substitution exerts different effects at the firm level. Finally, we show that service-based competition appears to have no significant impact on the investment decision of incumbents and entrants. However, with respect to the later phase of market liberalization, service-based competition exerts a negative impact on entrants’ investment. Our results thus also provide relevant policy guidance on the role of service-based competition in regulating emerging high-speed broadband infrastructure.

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  • Briglauer, Wolfgang & Gugler, Klaus & Haxhimusa, Adhurim, 2016. "Facility- and service-based competition and investment in fixed broadband networks: Lessons from a decade of access regulations in the European Union member states," Telecommunications Policy, Elsevier, vol. 40(8), pages 729-742.
  • Handle: RePEc:eee:telpol:v:40:y:2016:i:8:p:729-742
    DOI: 10.1016/j.telpol.2015.07.015
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    Cited by:

    1. repec:eee:telpol:v:42:y:2018:i:9:p:778-793 is not listed on IDEAS
    2. repec:ces:ifosdt:v:71:y:2018:i:07:p:03-21 is not listed on IDEAS
    3. repec:eee:telpol:v:43:y:2019:i:3:p:225-237 is not listed on IDEAS
    4. Marcus, J. Scott & Bocarova, Veronica & Petropoulos, Georgios, 2017. "Incentives for investment in fast broadband: How much can be expected from the proposed European Code?," 28th European Regional ITS Conference, Passau 2017 169483, International Telecommunications Society (ITS).

    More about this item

    Keywords

    Investment dynamics; Regulation; Service-based competition; Facility-based competition; Strategic effects;

    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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