Geographic Regulation and Cooperative Investment in Next Generation Broadband Networks - A Review of Recent Literature and Practical Cases

Abstract

Abstract:Alternative telecom operators have continuously invested in their own infrastructure in recent years. After more than a decade since liberalisation, competitive conditions have substantially changed, especially in urban areas. European regulatory authorities have acknowledged this development by starting regional deregulation. Additionally, different forms of cooperative investments in next generation broadband have appeared on the market. The effects of such schemes on competition, investment and welfare crucially depend on the fine details of implementation. For instance, in the case of joint-ventures, it matters how investment costs are shared and how internal and external access prices are determined. In the case of long-term access agreements, it is essential to consider how access tariffs are structured, whether they can adapt to market developments ex-post and whether contracts are signed before or after the investment takes place. Generally, many of these agreements allow some extent of risk sharing, offering the possibility to increase investment incentives when firms are not risk neutral. This article reviews the theoretical and empirical literature on geographic regulation and co-investments in next generation broadband. It is suggested that regulators consider introducing regulated co-investment agreements complementing current regulation or in some cases even substituting for it, in addition to considering geographically segmented access prices.

The Deployment of Next Generation Access Network in the EU: Facts and Analysis of Regulatory Issues

“…Hence, they suggested non-cooperation would be an effective model for the NGN network expansion. However, it is also important to mention the study of Balmer (2013) that some of the countries France, Spain, Switzerland, Portugal reaped the benefit of co-investment model by which the wider area has been covered with new infrastructure.…”

The Impact of Alternative Public Policies on the Deployment of New Communications Infrastructure – A Survey

“…Whereas the governments of most of the leading East-Asian fibre nations show a high degree of interventionism in terms of coordinating ICT development since the very beginning of broadband deployment, the EU in recent recommendations provided the opportunity for firms to co-ordinate and cooperate. 15 Moreover, European regulators increasingly introduced geographical deregulation acknowledging the development of infrastructure competition and as a tool for incentivizing investment in NGAN (Balmer, 2013). This section also covers the U.S.-style fully unregulated actual and potential competition between infrastructure-based NGA operators.…”

“…Second, our survey provides a broader (and more recent) review of policies than Bourreau, Cambini and Hoernig (2012) 4 who focus on the theoretical literature investigating ex ante regulations and co-investment in the transition to NGAN. Thirdly, Balmer (2013) reviews the empirical and theoretical literature as well as regulatory practice in the EU member states but focussing only on geographic (de-)regulation and cooperative investment in NGAN. Fourthly, Krämer and Schnurr (2014) provide a conceptual framework for analysing the impact of non-discriminatory open access policies on NGAN.…”

The European Electronic Communications Code: A Critical Appraisal with a Focus on Incentivizing Investment in next Generation Broadband Networks

“…In reviewing the academic literature we will only focus on the most relevant and recent contributions from both theoretical and empirical perspectives. For comprehensive surveys, the reader is referred to Balmer (2013) who reviews the literature focusing on geographic (de-) regulation and cooperative NGA investment as well as Briglauer et al (2015) who provide an overview of the existing academic literature on the impact of old and new broadband infrastructure access regulation on NGA investment and adoption of new broadband services. HSBC (2016) represents a policy-oriented review of a broad range of regulatory measures foreseen in the EECC proposal from an institutional investor´s point of view.…”