Access regulation and geographic deployment of a new generation infrastructure
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.
|Date of creation:||2012|
|Contact details of provider:|| Web page: http://www.itsworld.org/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- João Vareda & Steffen Hoernig, 2007.
"The race for telecoms infrastructure investment with bypass: Can access regulation achieve the first best?,"
29, Portuguese Competition Authority.
- Vareda, João & Hoernig, Steffen, 2007. "The race for telecoms infrastructure investment with bypass: Can access regulation achieve the first best?," FEUNL Working Paper Series wp524, Universidade Nova de Lisboa, Faculdade de Economia.
- Bastos Vareda, João Miguel & Hoernig, Steffen, 2007. "The Race for Telecoms Infrastructure Investment with Bypass: Can Access Regulation Achieve the First-best?," CEPR Discussion Papers 6203, C.E.P.R. Discussion Papers.
- de Bijl, P.W.J. & Peitz, M., 2004. "Unbundling the Local Loop : One-Way Access and Imperfect Competition," Discussion Paper 2004-025, Tilburg University, Tilburg Law and Economic Center.
- Hoernig, Steffen, 2005.
"Should Uniform Pricing Contraints be Imposed on Entrants?,"
CEPR Discussion Papers
5052, C.E.P.R. Discussion Papers.
- Steffen Hoernig, 2006. "Should uniform pricing constraints be imposed on entrants?," Journal of Regulatory Economics, Springer, vol. 30(2), pages 199-216, 08.
- M. Bourreau & P. Dogan & M. Manant, "undated".
"A critical review of the ladder of investment approach,"
33654, Harvard University OpenScholar.
- Bourreau, Marc & Dogan, PInar & Manant, Matthieu, 2010. "A critical review of the "ladder of investment" approach," Telecommunications Policy, Elsevier, vol. 34(11), pages 683-696, December.
- Barros, Pedro Luis Pita & Hoernig, Steffen & Valletti, Tommaso, 2001.
"Universal Service and Entry: the Role of Uniform Pricing and Coverage Constraints,"
CEPR Discussion Papers
2789, C.E.P.R. Discussion Papers.
- Valletti, Tommaso M & Hoernig, Steffen & Barros, Pedro P, 2002. "Universal Service and Entry: The Role of Uniform Pricing and Coverage Constraints," Journal of Regulatory Economics, Springer, vol. 21(2), pages 169-190, March.
- Faulhaber, Gerald R & Hogendorn, Christiaan, 2000. "The Market Structure of Broadband Telecommunications," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 305-329, September.
- Robert S. Pindyck, 2004.
"Mandatory Unbundling and Irreversible Investment in Telecom Networks,"
NBER Working Papers
10287, National Bureau of Economic Research, Inc.
- Pindyck Robert S., 2007. "Mandatory Unbundling and Irreversible Investment in Telecom Networks," Review of Network Economics, De Gruyter, vol. 6(3), pages 1-25, September.
- Duarte Brito & Pedro Pereira & João Vareda, 2008.
"Can Two-Part Tariffs Promote Efficient Investment on Next Generation Networks?,"
34, Portuguese Competition Authority.
- Brito, Duarte & Pereira, Pedro & Vareda, João, 2010. "Can two-part tariffs promote efficient investment on next generation networks?," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 323-333, May.
- Drew Fudenberg & Jean Tirole, 1985. "Preemption and Rent Equalization in the Adoption of New Technology," Review of Economic Studies, Oxford University Press, vol. 52(3), pages 383-401.
- Tilman Klumpp & Xuejuan Su, 2010. "Open Access and Dynamic Efficiency," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 64-96, May.
- 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.
- Foros, Oystein & Kind, Hans Jarle, 2003. "The Broadband Access Market: Competition, Uniform Pricing and Geographical Coverage," Journal of Regulatory Economics, Springer, vol. 23(3), pages 215-235, May.
- Hori, Keiichi & Mizuno, Keizo, 2006. "Access pricing and investment with stochastically growing demand," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 795-808, July.
When requesting a correction, please mention this item's handle: RePEc:zbw:itsb12:72537. 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: (ZBW - German National Library of Economics)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.