|
on Regulation |
| By: | Kocsis, Viktória |
| Abstract: | Network operators of competing infrastructures in European electronic communications markets face asymmetric regulation: incumbent telecommunications firms are required to open their networks for retail broadband competition, while cable companies have no such obligation. Furthermore, for historical reasons, cable companies have better quality networks thanks to the DOCSIS 3.0 technology than DSL-based telecom firms. How would the market structure of electronic communications markets and the quality of networks develop in the presence of asymmetric regulation and original quality differences? Based on a location model for product differentiation, i find that access revenues can compensate incumbent telecom firms for the loss due to having a lower quality network than cable companies. Therefore, access obligation reduces the incentives of telecom firms to compete with cable companies by upgrading network quality. In the absence of retail competitors without networks, however, telecom firms need to upgrade network quality to be able to remain competitive with cable companies. Furthermore and in line with the existing literature, the exclusion of retail competitors is more likely in the presence of higher access prices and stronger substitutuion between firms' products. Finally, if the original differences between network quality is large and high returns on investments are unlikely, telecom firms may not be able to invest sufficiently and lose substantially from their market shares. -- |
| Keywords: | Telecommunications,Investments,Quality,Access regulation,Asymmetric regulation |
| JEL: | L51 L96 L10 K23 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88521&r=reg |
| By: | Briglauer, Wolfgang |
| Abstract: | Fibre deployment of next-generation high-speed broadband networks is considered to be a decisive development for any information-based society, yet investment activities and especially the adoption of fibre-based broadband services take place only very gradually in most countries. This work employs static and dynamic model specifications and identifies the most important determinants of the adoption of fibre-based broadband services with recent panel data from the European Union member states for the years from 2004 to 2012. The results show that the more effective previous broadband access regulation is, the more negative the impact on adoption, while competitive pressure from mobile networks affects adoption in a non-linear manner. It appears that the approach of strict cost-based access regulation embedded in the EU regulatory framework is at odds with the targets outlined in the European Commission's Digital Agenda. Finally, we also find evidence for substantial network effects underlying the adoption process. -- |
| Keywords: | Next-generation telecommunications networks,regulation,competition,adoption,network effects |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88494&r=reg |
| By: | Jaunaux, Laure; Lebourges, Marc |
| Abstract: | This paper discusses the relevant cost standard for the economic replicability test for Next-Generation Access (NGA) networks, described in the Recommendation on Costing and Non-discrimination adopted by the European Commission. We demonstrate that a cost standard that implies fully fixed and variable cost recovery for the access seeker would be incompatible with the economics of NGA networks and that such a test would deter NGA investment. We show that to reconcile investment and competition, the wholesale price must be a two-part tariff and the economic replicability test should only be based on variable wholesale prices. We underline that during a transition phase, until competitors have secured access to NGA infrastructure, a temporary second test called the 'competition migration test' should be added to ensure incumbent NGA retail prices do not foreclose copper-based efficient entrants. The tests we propose surpass the limits of the 'ladder of investment' theory by including the business migration effect developed by Bourreau et al. (2012). -- |
| Keywords: | Margin squeeze,Regulation,Next-generation access networks |
| JEL: | L51 L96 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88501&r=reg |
| By: | Howell, Bronwyn |
| Abstract: | New Zealand stands apart from its OECD counterparts as one of the few countries pursuing government investment in a nationwide fibre network. As in the past, when it stood apart with its 'light-handed' regulatory approach, New Zealand's experience can inform other jurisdictions. This paper contributes by documenting and analysing the chronological history of the key political, regulatory and industry actions taken to implement the government fibre investment policy, between 2008 and September 2013. The chronology reveals an industry currently in considerable disarray. A critical political economy and industrial organisation-based analysis proposes that the incremental and pathdependent nature of the evolution of New Zealand's industry-specific regulatory environment resulted in a set of arrangements ill-suited to oversee the transition from a copper-based to a fibrebased fixed line access infrastructure. It contends that the current disarray was an inevitable outcome of a lack of co-ordinated oversight of sector policy and governance that allowed the fibre network investment to proceed without clearly-articulated overarching and forward-looking competition and regulation policies integrating legacy regulations and investments into the fundamentally different environment created by the government's revolutionary fibre policy. The result was the fragmentation of regulatory responsibility across many parties on the basis of network technology type. Consequently, each pursued its own objectives in isolation from the others, which led to a crisis in December 2012 when a regulatory decision about copper prices threatened the viability of the fibre project. Absence of clear and co-ordinated leadership of sector strategy in response to the crisis has resulted in the government's integrity being undermined and a loss of confidence amongst private sector investors. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88469&r=reg |
| By: | Stephen Holland; Andrew J. Yates |
| Abstract: | We analyze a novel method for improving the efficiency of pollution permit markets by optimizing the way in which emissions are exchanged through trade. Under full-information, it is optimal for emissions to exchange according to the ratio of marginal damages. However, under a canonical model with asymmetric information between the regulator and the sources of pollution, we show that these marginal damage trading ratios are generally not optimal, and we show how to modify them to improve efficiency. We calculate the optimal trading ratios for a global carbon market and for a regional nitrogen market. In these examples, the gains from using optimal trading ratios rather than marginal damage trading ratios range from substantial to trivial, which suggests the need for careful consideration of the structure of asymmetric information when designing permit markets. |
| JEL: | D82 H23 Q53 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19780&r=reg |
| By: | Rajabiun, Reza; Middleton, Catherine |
| Abstract: | This article explores the impact of public policy, technological change, and the development of Internet connectivity in EU members. The analysis illustrates that the results of previous empirical literature on the interplay between regulation, competition, and investment depend on the construction of indicators employed to evaluate this interaction. Furthermore, the article points out that the traditional policy model and related empirical literature treats fixed capital inputs in networks as a measure of digital infrastructure quality/outcomes. Using broadband speed measurements between 2007 and 2012, the article addresses this gap in the literature and evaluates the determinants of digital infrastructure quality in the EU. The analysis suggests the primary driver of network quality in the medium to long term is the willingness and/or ability of operators to reinvest more of their revenues in network capacity improvements. -- |
| Keywords: | Broadband Networks,European Union,Regulation,Technological Change,Federalism |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88536&r=reg |
| By: | Lundin, Erik (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This study provides the first empirical test of strategic interactions in the pricing decisions of regulated utilities. Since publicly owned water utilities in Sweden are governed by a cost-of-service regulation, prices in neighboring municipalities should not affect the own price other than through spatially correlated cost factors. In contrast, spatial dependence is pronounced. This behavior can be explained in terms of an informal yardstick competition: When consumers use neighboring utilities' prices as benchmarks for costs or as behaviorally based reference prices, utilities will face the risk of consumer complaints and successive regulatory reviews if deviating too much from neighbors' prices. |
| Keywords: | Yardstick competition; Spatial econometrics; Public economics; Utilities |
| JEL: | D40 L10 L50 L90 |
| Date: | 2013–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0998&r=reg |
| By: | Chalmeau, Olivier |
| Abstract: | This article studies the determinants of systematic risk for a panel of European telecommunication incumbent operators. The systematic risk (the beta coefficient) is estimated with the capital asset pricing model using different econometric methods (OLS, ML GARCH and Kalman Filter). Previous empirical literature has identified accounting variables as being determinants of systematic risk. These control variables serve as a basis to study the impact of regulation and competition on risk. The Polynomics regulatory index is used for regulation and Herfindahl-Hirschman Indexes for competition. The overall index of regulation doesn't have a clear impact on risk. However, subindexes indicating quantity regulation is associated with higher risk. By quantity, we mean regulatory constraints such as Universal service obligation or coverage obligation for mobile networks. In contrast, access regulation decreases the risk. The impact of the competition's intensity is different for the mobile and fixed markets. Results for mobile competition are not significant whereas more intense fixed competition is associated with less risk. These results are consistent with the interpretation that regulation and competition have reduced the investment of the sector. It is also consistent with the observation that competition has taken place on services rather than on infrastructures. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88495&r=reg |
| By: | Neumann, Karl-Heinz; Vogelsang, Ingo |
| Abstract: | In many countries worldwide access networks are in the transition from copper to fiber access. During the transition phase copper and fiber networks are operated in parallel. All regulators facing this situation of technological change have to decide how to price unbundled access to the copper loop in this transition phase. Should they keep the usual forward looking long-run incremental cost standard charge, or should they move to some different approach? The authors propose to price copper access based on the modern equivalent asset (MEA) of fiber access. Since fiber access is superior to copper access, the cost of fiber access (as a basis for pricing copper access) should, however, be corrected by the performance delta between copper and fiber access. Instead of using quality of service (QoS) differences, the authors determine the performance delta based on the market valuation of services provided over the copper and fiber access represented by the end-user prices of services and corrected by cost differences downstream of the access provision. Under this approach an access seeker becomes indifferent (on the margin) between using the copper or the fiber access network and wholesale pricing (or regulation) becomes competitively neutral towards technology choice between copper and fiber access and does not distort the platform competition towards cable. To test its practicability numerical simulations of the approach are performed by means of a quantitative competition model. The model analysis suggests that the approach leads to unique and robust results. Its main conclusion is that the method tends to be conservative relative to the theoretical case of pure vertical product differentiation, meaning that the measured performance delta underestimates the theoretical performance delta. -- |
| Keywords: | Copper access,Fiber to the home (FTTH),Modern equivalent asset,Long-run incremental costs (LRIC),Performance delta |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88516&r=reg |
| By: | Erdogdu, Erkan |
| Abstract: | The last three decades have witnessed many electricity industry reform processes in more than half of the countries in the world. The reforms have aimed, inter alia, at encouraging private investments in electricity infrastructure, enhancing security of electricity supply and making power industry operate in line with the requirements of the sustainable development. Using an original panel dataset from 55 developed and developing countries covering the period from 1975 to 2010, this study aims at finding out to what extent these objectives have been materialized so far. Econometric models are used to identify the effects of electricity market liberalization on these variables. The research findings suggest that the progress toward the electricity market reform is associated with a decline in private investments in the electricity industries of developing countries, higher levels of self-sufficiency in electricity supply and lower CO2 emissions from electricity generation. |
| Keywords: | Econometric modeling; institutions and the macroeconomy; electric utilities, market design |
| JEL: | C51 E02 F0 L94 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52679&r=reg |
| By: | Markendahl, Jan; Ahmed, Ashraf Awadelakrim Widaa; Mölleryd, Bengt G. |
| Abstract: | A Licensed Shared Access (LSA) authorization/license includes an agreement between the secondary sharing user (some type of operator) and the primary license holder (e.g. a government organization) around the conditions of use (where, when, how). Compared to secondary access LSA offers a more attractive case for long term investments. The contribution in this paper is that we look into how LSA can be used by different types of actors. The outcome depends heavily on what type of actor that makes use of the spectrum using LSA. Based on cost structure analysis (leading to required investments) and analysis of availability of the basic spectrum resource we can identify clear differences of the commercial usability of spectrum awarded using LSA, all depending on what actors that make use of the LSA contract. Cases where new actors need to invest a lot in new infrastructure do not that look that promising. We cannot identify a separate LSA business case that is feasible from a business perspective (where the key resource for the operator is spectrum awarded using LSA). Service availability that cannot be guaranteed due to LSA type of spectrum being the only resource seems risky, especially when combined with high investments. However this applies only for outdoor deployment. For deployment of a new indoor network the situation is different. The cost structure is the same no matter if a new or existing actor deploys the networks. In addition, a multitude of spectrum bands and spectrum access options exist indoor so the service provisioning will be less vulnerable if some part of spectrum is not available some period of time. -- |
| Keywords: | Actors,Competition,Cost structure analysis,Licensed/non-licensed spectrum bands,Mobile broadband,Network deployment,Regulation,Secondary/shared spectrum access |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88479&r=reg |
| By: | Fabritz, Nadine; Falck, Oliver |
| Abstract: | This paper investigates telecommunication operator investment in broadband infrastructure after local deregulation of the wholesale broadband access market. Using a panel dataset covering all 5,598 exchange areas in the United Kingdom, we exploit regional differences in deregulation following a 2008 reform. Controlling for initial conditions, first-difference estimates show that local deregulation increases local investment in infrastructure by both the incumbent and competitors. -- |
| Keywords: | Telecommunication,Regulation,Infrastructure Investment,Wholesale Broadband Access,United Kingdom |
| JEL: | L50 L96 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88513&r=reg |
| By: | Ghanbari, Amirhossein; Markendahl, Jan; Widaa, Ashraf Awadelakrim |
| Abstract: | Cooperation between Mobile Network Operators (MNO), as competing entities, has become a solution to overcome lack of revenue by reducing expenditures during recent years; where theses cooperation patterns consist of horizontal and vertical models. As much as all these models apply in macrocell networks, they are all applicable in smallcell networks as well, but it is observed that smallcells are still deployed in single operator patterns. On the other hand, telecom regulatory authorities are always concerned about cooperation between operators since they prefer fare distribution of market power among competing operators. The idea to stimulate competition, in order to bring maximum profit for end users, is an ultimate goal for regulators. At the same time, regulators are worried if a high level of collaboration between operators introduces new dilemmas such as creating closed clubs with significant market power. In this paper we first discuss interpretations of national European telecom regulators from the European electronic communications regulatory framework, which is considered as a reference for all countries. Surprisingly, we see that European countries have different interpretations of the same European framework while transposing it into their regulations. Next, the effect of these regulations that are either pro or against cooperation in smallcell networks is investigated. We conclude by presenting the idea that European regulators may need to revise their legislations by considering regulation for promoting smallcell wholesale network sharing as the proper solution. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88505&r=reg |
| By: | Maton, Alain |
| Abstract: | -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88498&r=reg |
| By: | Madden, Gary; Bohlin, Erik; Tran, Thien; Morey, Aaron |
| Abstract: | Competition policy attempts to address the potential for market failure by encouraging competition in service markets. Often, in wireless communication service markets, national regulatory authorities seek to encourage entry via the spectrum assignment process. Instruments used include the assignment mode (auction or beauty contest), setting aside licenses and providing bidding (price and quantity) credits for potential entrants, and making more licenses (spectrum blocks) available than incumbent firms (excess licenses). The empirical analysis assesses the effectiveness of these policy instruments on encouraging entry. The econometric results show that the probability of entry is enhanced by using auction assignments and excess licenses. Furthermore, quantity, but not price, concessions encourage entry. -- |
| Keywords: | spectrum licensing,policy instruments, market entry |
| JEL: | D82 L51 L96 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88476&r=reg |
| By: | Baglioni, Laura; Calabrese, Armando; Ghiron, Nathan Levialdi |
| Abstract: | This paper analysis the Internet interconnection market and combine the main technical (i.e. service quality) and economic aspects (i.e. profits and utility) characterizing relations between market players (end users, EUs; Internet Service Providers, ISPs; Internet Backbone Providers, IBPs) in order to determine possible economic outcomes in the strategic interaction between them. The proposed model enables a comparison to be made between expected values of social welfare (i.e. EU utility and profits of both ISPs and IBPs) on the current scenario (Best Effort) and considering two classes of priority in the traffic routing. Finally we illustrate the model's applicability to an example of network. -- |
| Keywords: | Net Neutrality,pricing,competition,service quality,Internet interconnection |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88506&r=reg |
| By: | Parcu, Pier Luigi; Silvestri, Virginia |
| Abstract: | For many years electronic communications has been one of the most important areas of policy intervention for the European Union. Liberalisation and privatisation of the telecommunications industry have been very important topics of the policy debate in the two decades starting from 1990 to 2010. In these years the EU developed a sophisticated regulatory framework inspired to the principle of favouring entrance of new players in the sector and characterised by a strong pro-competition flavour. More recently, however, the necessity to mobilise important investments for the creation of new Next Generation Networks, capable of delivering to European citizens all the benefits of the digital revolution, has shed doubts on the validity of the established framework. This paper discusses the solutions adopted during the liberalisation process and summarizes some of the key future challenges to the existing regulatory framework. -- |
| JEL: | K23 L43 L51 L96 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88509&r=reg |
| By: | Wulf, Jochen; Brenner, Walter |
| Abstract: | [Introduction] The diffusion of mobile broadband, which use cellular mobile communication technology, is at an advanced state in many countries. It is, however, unclear how mobile broadband diffusion affects other broadband services, and fixed broadband access in particular. Following the definition of ITU (2012) we define broadband as a high speed access to the Internet with download speeds of greater or equal to 256 kbit/s. Fixed broadband includes wired technologies such as cable, DSL and FTTH.1 Mobile broadband enables a non-stationary Internet access based on cellular mobile communication technologies (such as LTE, UMTS or WIMAX). Competitive effects between different broadband access technologies are of high importance for regulation as well as for competitive strategy: With regard to regulations, technology platform competition can have an effect on the competitive behavior in the individual markets. With regard to competitive strategy, competitive or complementarity effects between different access technologies significantly determine the success of service bundeling strategies. The goal of our research is twofold. Firstly, want to gain a deeper understanding of how mobile and fixed broadband diffusion affect each other based on the latest country level panel data (ITU 2012, World Bank 2013). A second objective of our research is to deepen the understanding of factors moderating the competitive relationship between fixed and mobile broadband. We therefore present a methodology for moderation analysis and exemplarily demonstrate its application. The paper is structured as follows. The related research is presented in the following section. The third section addresses the models, data and methodology of analysis. Thereafter, the results of the competition and the moderation analyses are presented and discussed. The conclusions section discusses limitations and next research steps. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88532&r=reg |
| By: | Aygul Ozbafli (JDINT'L Department of Economics Queen's University, Canada); Glenn Jenkins (Department of Economics, Queen's University, Canada, Eastern Mediterranean University, Mersin 10, TURKEY) |
| Abstract: | This research examines households’ willingness to pay (WTP) for an improved electricity service. Households’ stated WTP is estimated using the choice experiment method (CE). The data used in the estimations came from 350 in-person interviews conducted during the period 5–22 August 2008 in North Cyprus. Compensating variation (CV) estimates for a zero-outage scenario are calculated using the parameter estimates from the mixed logit (ML) model; these are 6.65 YTL (Turkish lira) per month (5.66 USD) for summer and 25.83 YTL per month (21.97 USD) for winter. In order to avoid the cost of outages, households are willing to incur a 3.6% and a 13.9% increase in their monthly electricity bill for summer and winter, respectively. The WTP per hour unserved is 0.28 YTL (0.24 USD) for summer, and 1.08 YTL (0.92 USD) for winter. A preliminary cost–benefit analysis indicates that the annualized economic benefits are approximately 16.3 million USD for the residential sector, and justify an investment in additional generation capacity of approximately 120 MW. |
| Keywords: | Willingness to pay; choice experiment; electricity; outages; reliability |
| JEL: | D12 D61 L94 L98 Q41 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:qed:dpaper:224&r=reg |
| By: | Shin, Donghee |
| Abstract: | Beyond technical matters, the network neutrality debate is closely tied to social, political, and economic debate over networks and the duties and the rights of various stakeholders. The study contextualizes the issue in terms of policy, innovation, values, and the society of Korean context. Focusing on user perspective, it analyzes the policy effectiveness of current network neutrality by analyzing user perception. A model is proposed to empirically test the policy effectiveness by incorporating factors representing network neutrality. The factors are drawn from the belief of people's perceived concepts on network neutrality. The findings show that while competition and regulation are the two main factors constituting network neutrality, both factors influence the formation of attitude toward policy effectiveness differently. Policy and managerial implications are discussed based on the model. Overall, this study provides in-depth analysis and heuristic data on the user drivers, industry dynamics, and policy implication within the network neutrality ecosystem. -- |
| Keywords: | Network neutrality,Policy capacity,Korea,User-centered policy analysis |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88540&r=reg |
| By: | Han, Sang-wook; Sung, Ki Won; Zander, Jens |
| Abstract: | We describe the basic economic theory of cost model for network deployment and spectrum in wireless networks. In particular, we develop a production function for wireless networks. With this production function model, we explore the technical rate of substitution and the elasticity of substitution in the production function for wireless network and find its insight for wireless network. Finally, we compare the engineering value of spectrum and economic value of spectrum. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88512&r=reg |
| By: | Gruber, H.; Hätönen, J.; Koutroumpis, P. |
| Abstract: | This paper evaluates the net benefits of the implementation of the broadband infrastructure deployment targets by 2020 as entailed by the Digital Agenda for Europe Initiative set forth by the European Commission. We estimate the returns from broadband infrastructure for the period 2005-2011, differentiating the impact of broadband by levels of adoption and speed while accounting for reverse causality and extensive heterogeneity. We find that in the base case scenario the overall benefits outweigh the costs by 32% for the entire European Union. We further extrapolate the returns by country under different scenarios of implementation. In most cases the benefits are substantially well above the costs. The findings lead to policy recommendations related to the role of public support for the generalized build out of broadband infrastructure. -- |
| Keywords: | broadband networks,economic impact,Digital Agenda |
| JEL: | O33 O38 O52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse13:88492&r=reg |