nep-reg New Economics Papers
on Regulation
Issue of 2013‒04‒27
nine papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Access regulation and geographic deployment of a new generation infrastructure By Flacher, David; Jennequin, Hugues
  2. An empirical study of unbundling regulation on broadband adoption in OECD countries: What can we learn for future regulation? By Kongaut, Chatchai; Bohlin, Erik
  3. Smart TV business regulation and collaboration among business operators and regulators: Focus on the case analysis of Smart TV blocking and IPTV regulation process in Korea By Kim, Yaeeun; Chang, Younghoon; Park, Myeong-cheol
  4. Access regulation in the next generation access network environment: A comparative study of Hong Kong and Singapore from the transaction cost economics perspectives By Ho, Au Man
  5. Open access networks and national broadband plans: Tales from down By Beltrán, Fernando
  6. The Impact of Ownership Unbundling on Cost Efficiency: Empirical Evidence from the New Zealand Electricity Distribution Sector By Filippini, Massimo; Wetzel, Heike
  7. Wide area commons: Current regulation and possibilities for the future By Elsner, Jens; Weber, Arnd
  8. The bilateral approach to reducing international mobile roaming charges and the application of the GATS By Ryan, Michael H.
  9. The effect of on-net By Muck, Johannes

  1. By: 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. --
    Keywords: Access regulation,geographic deployment,network industries,telecommunications,investment.
    JEL: L43 L51 L96 R58
    Date: 2012
  2. By: Kongaut, Chatchai; Bohlin, Erik
    Abstract: Broadband adoption is considered one of the drivers of both economic and social development. Local loop unbundling (LLU) regulation is one of the main strategies to open access to an incumbent's bottleneck network in order to soften its monopoly power and encourage competition in the digital subscriber line (DSL) broadband market. Many studies, however, suggest that LLU regulation can slow down new infrastructure investment. Fibre optic technology is also increasingly becoming an option for the next generation network (NGN). This development is turning out to be the new challenge for regulators, incumbents and new entrants. With the similarities to DSL broadband and the move towards technology neutrality, regulators may also be able to adjust their future next generation access (NGA) regulation by learning from the strengths and weaknesses of LLU regulation. This paper therefore aims to analyse the impacts of unbundling policy on various aspects of broadband adoption that can be presented as consumer welfare. The possible adaptation to NGA regulation is also discussed in this paper. The empirical results of this study show that LLU regulation is one of the strategies to increase broadband adoption, particularly in the countries that have difficulty encouraging infrastructure competition. Nevertheless, several studies suggest that unbundling regulation reduces the incumbent's incentive to invest. With the dramatic growth in technologies, the main policy to increase broadband penetration should be competition between them, while unbundling regulation can be implemented carefully and differently in each country that has inefficiency that is harmful to consumers in its market from a monopoly incumbent. The decision to apply access regulation from DSL to fibre technology is therefore crucial to whether the regulator regulates the NGN market from the early stage of investment or waits for the NGN market to become more mature. Alternatively, the regulator can opt not to intervene in the market for a certain period of time, as access regulation can delay the growth in infrastructure investment. --
    Keywords: Local loop unbundling,broadband adoption,access regulation
    Date: 2012
  3. By: Kim, Yaeeun; Chang, Younghoon; Park, Myeong-cheol
    Abstract: The lack of detailed guideline of network traffic management has led complex conflicts among ICT players. Among them, the most severe case was KT and Samsung's case: Korea Telecom (KT) once blocked Internet connection of Samsung Smart TV service users. This aroused the needs of a reasonable policy establishment. On the process of making policy regarding network management, participants, for example network operators, device and platform providers, and contents providers, are sticking to their own stances. Their passive responses are now leading deepen problems. Thus, we focused on the way of conflict management in a policy level. With internal and external case studies and conflict management grid, we substantiated that the dispute participants will be better off altogether under a reasonable regulation and collaboration. --
    Keywords: Smart TV Service,Conflict Management,Regulation, Collaboration.
    Date: 2012
  4. By: Ho, Au Man
    Abstract: Hong Kong and Singapore have adopted two different models in the regulation of the next generation access (NGA) networks. In Hong Kong, the government has decided that access regulation will not be applied to fibre-based access networks and its strategy will be to rely on facilities-based competition to promote investment in the NGA networks. Singapore, on the other hand, has promoted access/services-based competition over a next generation broadband infrastructure subsidised by public funding and operated on an open accessbasis. This paper applies the theories of transaction cost economics (TCE) to analyse the two different regulatory models adopted in Hong Kong and Singapore for the NGA networks. Transaction cost economics is concerned with the study of governance structures. Governance structures operate within the relationship between transacting parties for the purpose of dealing with contractual hazards. Market, firms, regulation, public franchise and public ownership are alternative governance structures operating in the NGA environment. Governance structures aim to minimise transaction costs caused by contractual hazards. --
    Date: 2012
  5. By: Beltrán, Fernando
    Abstract: Recently, governments in many countries have acknowledged the higher complexity involved in finding the more efficient path towards a so-called broadband ecosystem. The governments of Australia and New Zealand are leading the deployment of national fibre-based broadband infrastructures through Public-Private-Partnerships (PPP). The paper is on the approach followed by New Zealand and Australia to developing Next-Generation broadband infrastructure, their broadband policies and strategies for network deployment. It also contributes an economic analysis that allows understanding the economics of those country-wide broadband platforms.The paper critically analyses the short history of each experience, including the political process, the reasons exhibited that justify the governments' involvement in infrastructure deployment, and the institutional arrangements introduced to manage the PPP. The paper's main goal is to contribute analytical tools to the understanding of the economic effects of a purpose-made infrastructure on the markets that, according to every government's declared expectation, will be propelled by the combined effect of policy decisions, regulations and technology deployment. The paper analyses the effect of network design principles such as open access and regulated wholesale tariffs on the efficiency of service markets to be deployed on the fibre-based next-generation platform. --
    Date: 2012
  6. By: Filippini, Massimo (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Wetzel, Heike (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: Several countries around the world have introduced reforms to the electric power sector. One important element of these reforms is the introduction of an unbundling process, i.e., the separation of the competitive activities of supply and production from the monopole activity of transmission and distribution of electricity. There are several forms of unbundling: functional, legal and ownership. New Zealand, for instance, adopted an ownership unbundling in 1998. As discussed in the literature, ownership unbundling produces benefits and costs. One of the benefits may be an improvement in the level of the productive efficiency of the companies due to the use of the inputs in just one activity and a greater level of transparency for the regulator. This paper analyzes the cost efficiency of 28 electricity distribution companies in New Zealand for the period between 1996 and 2011. Using a stochastic frontier panel data model, a total cost function and a variable cost function are estimated in order to evaluate the impact of ownership unbundling on the level of cost efficiency. The results indicate that ownership separation of electricity generation and retail operations from the distribution network has a positive effect on the cost efficiency of distribution companies in New Zealand. The estimated effect of ownership separation suggests a positive average one-off shift of 23 percent in the level of cost efficiency in the shortrun and 15 percent in the long-run.
    Keywords: Electricity distribution; Ownership separation; Cost efficiency; Total cost function; Variable cost function; Stochastic frontier analysis
    JEL: D24 L51 L94
    Date: 2013–02–10
  7. By: Elsner, Jens; Weber, Arnd
    Abstract: An internationally harmonized regulation permitting unlicensed transmission in the lower UHF bands is proposed. Such a regulation is expected to create a new market for high range WLAN and digital PMSE devices, closing one of the last gaps of unlicensed wireless communication. --
    Date: 2012
  8. By: Ryan, Michael H.
    Abstract: Although it is generally acknowledged that international mobile roaming charges are too high, a successful formula for achieving reduction has so far proven elusive. Direct regulatory intervention to lower prices may be required. The success of such an approach depends upon the ability of countries to implement mutual reductions in the inter-operator tariffs (IOTs) that mobile operators charge each other for originating and terminating roaming calls. In the absence of a multilateral response, some countries have entered into bilateral arrangements to reduce IOTs. Questions have been raised about the compatibility of such bilateral arrangements with countries' obligations under the General Agreement on Trade in Services (the GATS), which generally forbids member countries from maintaining preferential arrangements with other countries that affect international trade in services. I identify and discuss two issues that arise about the application of the GATS to these bilateral arrangements: (1) How do the provisions of the GATS requiring parties to treat each others' service suppliers 'no less favourably' than they treat service suppliers of other countries and to offer non-discriminatory terms for network access apply to such bilateral arrangements? (2) Given that the GATS applies only to official measures affecting international trade in services, how does the GATS apply to bilateral arrangements between mobile operators which are ostensibly private in character but which are concluded at the instigation of officials? As I note in the conclusion, these issues have yet to be resolved. --
    Keywords: regulation,international trade,telecommunications,international roaming,WTO,GATS
    Date: 2012
  9. By: Muck, Johannes
    Abstract: I explore the effects of on-net / off-net differentiation on network sizes in mobile telecommunications when both rational and non-rational consumers coexist in the market. In particular, three different types of consumers are modeled: (1) fully informed rational (FIR) consumers who are perfectly informed about the true market shares of all networks and choose the network with the lowest expected cost of a call; (2) partly informed rational (PIR) consumers who only observe market shares within a circular sensing field and choose the network with the lowest expected cost of a call based on these observed market shares; and (3) non-rational (NR) consumers who choose the network with the highest market share among their immediate neighbors. Using an agent-based simulation approach and by systematical variation of four key parameters of the model, three key results emerge. First, if the share of FIR consumers is too high, all consumers will eventually join the initially larger network A. Second, if their share in the population is sufficiently large, NR consumers can prevent the growth of clusters of consumers subscribed to network B. Third, if the share of PIR consumers is high, clusters of consumers subscribed to network B can grow, thereby increasing network B's market share, provided that the radius of their circular sensing field is small enough for the cluster size. --
    Date: 2012

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