IDEAS home Printed from https://ideas.repec.org/p/cap/wpaper/032009.html
   My bibliography  Save this paper

The momentum for network separation: a guide for regulators

Author

Listed:
  • Ricardo Gonçalves

    () (Faculdade de Economia e Gestão - Universidade Católica Portuguesa - Porto)

  • Álvaro Nascimento

    () (Faculdade de Economia e Gestão - Universidade Católica Portuguesa - Porto)

Abstract

NGAs (Next Generation Access Networks) are a challenge to regulators and operators insofar as they require large investments, there is significant uncertainty about the ability to recover costs, and the choice of the appropriate regulatory regime is far from consensual. Regulatory authorities might want to seize the moment and reconsider the mandatory vertical separation of telecommunication firms, without jeopardizing incentives to innovation, investment and welfare. We provide a provocative but simple test for the adequacy of network separation as a regulatory remedy. We propose a decision tree procedure with four steps in order to assess whether network separation is an adequate regulatory response: [1] “Is there significant market power in the market for the provision of access services under NGAs?”; [2] “Are there few vertical complementarities between services along the supply chain?”; [3] “Is functional separation a better regulatory tool than any other alternative?”; and [4] “Is structural separation superior to functional separation?”. A positive answer to the first three questions implies that the regulator should consider functional network separation, whilst the fourth is needed for the structural alternative.

Suggested Citation

  • Ricardo Gonçalves & Álvaro Nascimento, 2009. "The momentum for network separation: a guide for regulators," Working Papers de Economia (Economics Working Papers) 03, Católica Porto Business School, Universidade Católica Portuguesa.
  • Handle: RePEc:cap:wpaper:032009
    as

    Download full text from publisher

    File URL: http://www.feg.porto.ucp.pt/docentes/repec/WP/032009%20-%20GoncalvesNascimento%20-%20The%20momentum%20for%20network%20separation%20-%20a%20guide%20for%20regulators.pdf
    File Function: First version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fabian KIRSCH & Christian von HIRSCHHAUSEN, 2008. "Regulation of NGN: Structural Separation, Access Regulation, or No Regulation at All?," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(69), pages 63-84, 1st quart.
    2. Pittman Russell, 2005. "Structural Separation to Create Competition? The Case of Freight Railways," Review of Network Economics, De Gruyter, vol. 4(3), pages 1-16, September.
    3. Cave, Martin, 2006. "Six Degrees of Separation : Operational Separation as a Remedy in European Telecommunications Regulation," MPRA Paper 3572, University Library of Munich, Germany.
    4. Russell Pittman, 2003. "Vertical Restructuring (or Not) of the Infrastructure Sectors of Transition Economies," Journal of Industry, Competition and Trade, Springer, vol. 3(1), pages 5-26, March.
    5. P.W.J. De Bijl, 2005. "Structural Separation and Access in Telecommunications Markets," Competition and Regulation in Network Industries, Intersentia, vol. 6(2), pages 95-115, June.
    6. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Howell, Bronwyn, 2014. "Structural Separation and Technological Diffusion," Working Paper Series 4353, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    2. Howell, Bronwyn, 2014. "Separation anxieties: Structural separation and technological diffusion in nascent fibre networks," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106840, International Telecommunications Society (ITS).
    3. 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.
    4. Ben Dkhil, Inès, 2014. "Regulation and Investment in Telecom Network Infrastructure Facilities: The Recent Developments and Debates," MPRA Paper 72910, University Library of Munich, Germany, revised 02 Feb 2015.

    More about this item

    Keywords

    Telecommunications networks; Functional separation; Structural separation;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cap:wpaper:032009. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ricardo Goncalves). General contact details of provider: http://edirc.repec.org/data/feucppt.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.