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Access regulation and geographic deployment of a new generation infrastructure

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  • Flacher, David
  • Jennequin, Hugues

Abstract

This article addresses the impact of regulatory policy on levels of infrastructure deployment and derived welfare in the telecommunications sector. The model considers two potentially coexisting and partially competing techniques (the old ADSL - Asymmetric Digital Subscriber Line - technique) - and the new FTTH - Fibre To The Home - one). Competition is supposed to be high on the ADSL market because of already existing regulation. We assume that two types of operators are competing in order to provide FTTH services: those that build and operate the new infrastructures (OPf1) and those that just buy access to them (OPf2). In our model, the level of investment is decided at stage 1 and the access price is decided at stage 2. At stage 3, OPf1 and OPf2 compete à la Cournot. This common framework allows us to show that the regulation defining access price in order to maximise infrastructure deployment is strictly equivalent to the case in which no regulation applies. We also derive from the model that these two types of regulation induce higher social welfare, but lower numbers of FTTH consumers than cost-oriented access regulation. Finally, we show that the level of infrastructure deployment (as well as social welfare and number of FTTH consumers) will be at its highest if both investment and access price decisions are taken by the regulator. This suggests that the social optimum will be achieved through a call-for-tender process including deployment and access prices requirements.

Suggested Citation

  • Flacher, David & Jennequin, Hugues, 2012. "Access regulation and geographic deployment of a new generation infrastructure," 19th ITS Biennial Conference, Bangkok 2012: Moving Forward with Future Technologies - Opening a Platform for All 72537, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itsb12:72537
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    File URL: https://www.econstor.eu/bitstream/10419/72537/1/741720140.pdf
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    References listed on IDEAS

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    7. Keiichi Hori & Keizo Mizuno, 2009. "Competition schemes and investment in network infrastructure under uncertainty," Journal of Regulatory Economics, Springer, vol. 35(2), pages 179-200, April.
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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. 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).
    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. 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).
    5. 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.
    6. 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).

    More about this item

    Keywords

    Access regulation; geographic deployment; network industries; telecommunications; investment.;

    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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