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Structural Separation and Access in Telecommunications Markets

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  • Paul de Bijl

Abstract

This paper presents a basic framework to assess whether structural (vertical) separation is desirable. It is discussed within the setting of fixed telecommunications markets. From an economist’s perspective, the key question that underlies the case for structural separation is: is there a persistent bottleneck? The obvious candidate is the ‘local loop’, or local access network. If yes then it makes sense to compare the costs and benefits of structural separation. The framework provides a set of options that the regulator can use strategically, by using the threat of a break-up to influence an incumbent’s competitive stance in the wholesale market.

Suggested Citation

  • Paul de Bijl, 2005. "Structural Separation and Access in Telecommunications Markets," CESifo Working Paper Series 1554, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1554
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp1554.pdf
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    References listed on IDEAS

    as
    1. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, January.
    2. de Bijl, Paul W.J. & Peitz, Martin, 2005. "Local Loop Unbundling in Europe: Experience, Prospects and Policy Challenges," MPRA Paper 2441, University Library of Munich, Germany.
    3. Witold J. Henisz & Bennet A. Zelner, 2001. "The Institutional Environment for Telecommunications Investment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 123-147, March.
    4. Machiel Mulder & Victoria Shestalova & Mark Lijesen, 2005. "Vertical separation of the energy-distribution industry; an assessment of several options for unbundling," CPB Document 84, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Russell Pittman, 2001. "Vertical Restructuring of the Infrastructure Sectors of Transition Economies," Industrial Organization 0111002, EconWPA.
    6. Knieps, Günter, 2002. "Does the system of letter conveyance constitute a bottleneck resource?," Discussion Papers 88, University of Freiburg, Institute for Transport Economics and Regional Policy.
    7. Faulhaber, Gerald R., 2003. "Policy-induced competition: the telecommunications experiments," Information Economics and Policy, Elsevier, vol. 15(1), pages 73-97, March.
    8. Bourreau, Marc & Dogan, Pinar, 2004. "Service-based vs. facility-based competition in local access networks," Information Economics and Policy, Elsevier, vol. 16(2), pages 287-306, June.
    9. Bourreau, Marc & Dogan, Pinar, 2001. "Regulation and innovation in the telecommunications industry," Telecommunications Policy, Elsevier, vol. 25(3), pages 167-184, April.
    10. 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.
    11. Jerry A. Hausman, 1997. "Valuing the Effect of Regulation on New Services in Telecommunications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1997 Micr), pages 1-54.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gonçalves, Ricardo & Nascimento, Álvaro, 2010. "The momentum for network separation: A guide for regulators," Telecommunications Policy, Elsevier, vol. 34(7), pages 355-365, August.
    2. repec:kap:jincot:v:17:y:2017:i:4:d:10.1007_s10842-016-0243-y is not listed on IDEAS
    3. Brito, Duarte & Pereira, Pedro & Vareda, João, 2011. "An assessment of the equality of access and no-regulation approaches to next generation networks," Telecommunications Policy, Elsevier, vol. 35(9), pages 818-826.
    4. 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).
    5. Paul de Bijl, 2011. "Broadband Policy in the Light of the Dutch Experience with Telecommunications Liberalization," CPB Discussion Paper 169, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Howell, Bronwyn, 2012. "Competition and Regulation Policy in Antipodean Government-Funded UltraFast Fibre Broadband Markets," Working Paper Series 4133, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. Brito Duarte & Pereira Pedro & Vareda João, 2012. "Does Vertical Separation Necessarily Reduce Quality Discrimination and Increase Welfare?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-44, November.
    8. Howell, Bronwyn, 2012. "Competition and Regulation Policy in Antipodean Government-Funded UltraFast Fibre Broadband Markets," Working Paper Series 2787, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    9. Howell, Bronwyn, 2007. "A Pendulous Progression: New Zealand's Telecommunications Regulation 1987-2007," Working Paper Series 3974, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    10. Duarte Brito & Pedro Pereira & João Vareda, 2011. "Can Vertical Separation Reduce Non-Price Discrimination and Increase Welfare?," CEFAGE-UE Working Papers 2011_06, University of Evora, CEFAGE-UE (Portugal).
    11. Heatley, David & Howell, Bronwyn, 2010. "Structural Separation and Prospects for Welfare-Enhancing Price Discrimination in a New 'Natural Monopoly' Network: comparing fibre broadband proposals in Australia and New Zealand," Working Paper Series 4056, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    12. 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.
    13. Howell, Bronwyn, 2011. "Competition and Regulation Policy in Antipodean Government-Funded Ultrafast Broadband Network Markets," Working Paper Series 4099, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    14. Howell, Bronwyn, 2013. "Broadband regulation and government investment in nationwide ultra fast fribre broadband networks: Evidence from New Zealand," 24th European Regional ITS Conference, Florence 2013 88469, International Telecommunications Society (ITS).
    15. Harnisch, Christian, 2009. "Funktionale Separierung als strategisches Regulierungsinstrument auf dem europäischen Telekommunikationsmarkt," Arbeitspapiere 83, University of Münster, Institute for Cooperatives.

    More about this item

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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