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Speeding up the internet: Regulation and investment in European fiber optic infrastructure

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  • Briglauer, Wolfgang
  • Cambini, Carlo
  • Grajek, Michał

Abstract

In this paper we study how the coexistence of access regulations for legacy (copper)and fiber networks shapes the incentives to invest in network infrastructure. To this end, we develop a theoretical model explaining investment incentives by incumbent telecom operators and heterogeneous entrants and test its main predictions using panel data from 27 EU member states over the last decade. Our theoretical model extends the existing literature by, among other things, allowing for heterogeneous entrants in internet access markets, as we consider both other telecom and cable TV operators as entrants. In the empirical part, we use a novel data set including information on physical fiber network investments, legacy network access regulation and recently imposed fiber access regulations. Our main finding is that more stringent access regulations for both the legacy and the fiber networks harm investments by incumbent telecom operators, but, in line with our theoretical model, do not affect cable TV operators.

Suggested Citation

  • Briglauer, Wolfgang & Cambini, Carlo & Grajek, Michał, 2017. "Speeding up the internet: Regulation and investment in European fiber optic infrastructure," ZEW Discussion Papers 17-028, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:17028
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    More about this item

    Keywords

    Internet access market; Access regulation; Investment; Infrastructure; Next Generation Networks; Broadband; Telecoms; Cable operators and Europe;
    All these keywords.

    JEL classification:

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

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    This paper has been announced in the following NEP Reports:

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