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Level of Access and Competition in Broadband Markets

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  • Bourreau, Marc
  • Dogan, Pinar

Abstract

In this paper, we consider an unregulated incumbent who owns a broadband infrastructure and decides on how much access to provide to a potential entrant. The level of access, i.e., the network elements that are shared in the provision of competing broadband services, not only determines the amount of investment the entrant needs to undertake to enter the market, but also the intensity of post-entry competition. We consider an access scheme that determines an access level and an associated two-part tariff. We show that the equilibrium level of access is higher when the sensitivity of product differentiation to the level of access is lower, and when the marginal investment cost is higher. We also show that the unregulated incumbent sets a suboptimally low (high) level of access if the degree of service differentiation is sufficiently high (low).

Suggested Citation

  • Bourreau, Marc & Dogan, Pinar, 2010. "Level of Access and Competition in Broadband Markets," Scholarly Articles 4454152, Harvard Kennedy School of Government.
    • Handle: RePEc:hrv:hksfac:4454152
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    References listed on IDEAS

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    1. João Vareda, 2007. "Unbundling and Incumbent Investment in Quality Upgrades and Cost Reduction," Working Papers 31, Portuguese Competition Authority.
    2. Cave, Martin, 0. "Encouraging infrastructure competition via the ladder of investment," Telecommunications Policy, Elsevier, vol. 30(3-4), pages 223-237, April.
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    6. Cambini, Carlo & Jiang, Yanyan, 0. "Broadband investment and regulation: A literature review," Telecommunications Policy, Elsevier, vol. 33(10-11), pages 559-574, November.
    7. Marc Bourreau & Pinar Dogan, 2006. ""Build-or-Buy" Strategies in the Local Loop," American Economic Review, American Economic Association, vol. 96(2), pages 72-76, May.
    8. Bourreau, Marc & Dogan, Pinar, 2005. "Unbundling the local loop," European Economic Review, Elsevier, vol. 49(1), pages 173-199, January.
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    Cited by:

    1. 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.
    2. Marc Bourreau & Pınar Doğan & Romain Lestage, 2014. "Level of access and infrastructure investment in network industries," Journal of Regulatory Economics, Springer, vol. 46(3), pages 237-260, December.
    3. Renata Sliwa, 2015. "Facility-based competition — toward more deregulation in telecommunications sector," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 14(2), pages 261-273, June.

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