Liberalizing telecommunications in Europe: path dependency and institutional complementarities

Abstract

We empirically investigate the nature and outcomes of the liberalization process in European telecommunications. First, we show that decisions to liberalize a country´s telecommunications sector have followed a path dependent and cumulative pace. Moreover, we investigate the extent to which path-dependency might have forced liberalizations, regardless of the creation of complementary institutions governing promarket outcomes. We find that the impact of liberalizations on competition is strongly enhanced by the establishment of complementary institutions, such as the national regulatory authority. Our findings contribute to the existing literature by outlining the role played by path dependency and institutional complementarities in the process of European liberalization. Our conclusions may provide useful lessons for the optimal policy design of pro-market policies in those European network industries that still wait for substantial liberalization.

Competing against yourself: State duopoly in the Luxembourg telecommunications industry

“…Clifton, Comín, and Díaz-Fuentes (2011), among others, demonstrate how liberalisation, along with privatisation and the introduction of competition into markets, has enabled some of the former state owned incumbent operators to expand their spatial reach and emerge as multinational companies. In contrast, Belloc, Nicita, and Parcu (2013) empirically investigate the nature and outcomes of liberalisation and show the importance of NRAs in this process. Levin and Schmidt (2010) discuss the establishment of NRAs, highlighting how they differ between countries in terms of their competence and ability.…”

The Evolution of the European Regulatory Framework for Electronic Communications

“…The history of European electronic communications reform has been told many times so that it is not necessary to recap it in detail (Belloc, Nicita, & Parcu, 2013;de Streel, 2008;Eliassen & Sjovaag, 1999;Michalis, 2006;Noam, 1992;Thatcher, 2002). Nonetheless, it may be helpful to highlight a few main aspects as they contribute to a fuller understanding of the recent developments.…”

“…As in the American reform process, the momentum generated at a higher level in the policy system was critical to get the reform process moving and forge consensus visions that could be implemented. In a series of directives, the European Commission (EC) proceeded to introduce measures that successively liberalized terminal equipment, value-added and other services, until eventually, in 1998 all services and networks were opened to competition (Bance, 2007;Belloc et al, 2013;M. E. Cave & Valletti, 2000;Jordana, 2002;Thatcher, 1999).…”

“…The roots of many of these issues can be found in forms of path dependence (Belloc et al, 2013;J. Cave, 2009).…”

Electronic Communications Regulation in Europe: An Overview of Past and Future Problems

“…In a subsequent document "Promoting the shared use of radio spectrum resources in the internal market" (COM (2012) LSA appears to have certain advantages over CUS: it can be implemented rapidly in Europe under the existing EU regulatory framework for electronic communications; it aims at offering a predictable quality of service, well-defined rights of use and obligations; and it can foster a progressively increased harmonisation of frequencies for mobile internet access and use (Parcu et al, 2012).…”