Telecommunications Policies: Measurement and Determinants

Abstract

This paper presents new data on telecommunications reform for a cross section of countries. We measure telecommunications reform along two dimensions: entry barriers and regulatory independence. This data set is combined with a comprehensive set of performance, institutional and political data to analyze the determinants of telecommunications policies. We find that entry barriers are positively associated with the degree to which countries have an interventionist legal tradition, but they are unrelated to the partisan ideology of reforming governments. We also find that countries with weak protection of investors' quasi-rents by other means, and countries with a larger incumbent, are more prone to create independent regulatory agencies, although the latter is a weaker result.

Commitment and Regulatory Independence in Practice in Latin American and Caribbean Countries

“…However, when the ir1 index is added (see Table 6), this has a negative impact which is significant at the 10% level and the adjusted R square improves. This negative and weakly significant result is very similar to that found by Gual and Trillas (2004) for a different group of 37 countries in a cross section exercise.…”

“…Concerning the relative position of the 23 countries (see Table 4 Edwards and Waverman (2006) and Gual and Trillas (2006).…”

Language as a key factor of long-term value creation in mergers and acquisitions in the telecommunications sector

“…According with Gual and Jodar-Rosell (2007) the process of technological change, coupled with regulatory changes produced after the liberalization of the sector, explains much of merger developments since the late nineties and it is expected that both factors are also crucial in determining future operations. The typical conflict between regulation, competition and investment emerges, and it has been deeply analyzed in the telecommunication literature (for a revision Blum et al 2007, and also Gual and Trillas, 2006;Gual and Waverman, 1998;Amstrong and Sappington 2006;Evans, et al, 2008;Huigen and Cave, 2008) Specifically in telecommunications M&A, the reasons usually given to justify these operations are (Warf, 2003, Lee, et al, 2008Nam, et al, 2005): globalization, deregulation, technological changes, economies of scale and scope and tax environment (especially in the case of United States). These fully coincide with the justifications usually identified in the theory of mergers and acquisitions; additionaly for telecommunications some other particular reasons are mentioned in the literature: network externalities or network effects that invite to the operators to increase size and clients (Katz and Shapiro, 1985;, Chen and Jinhong, 2007), technological agility (Rosenkopf and Schleiche, 2008) as this is one of the industries characterized by a high level of competitiveness and short innovation cycles, and the seizures that this sector has suffered; Akdogu (2009Akdogu ( , 2011, studying telecommunications M&A, remember that there is a recent trend in the literature on mergers and acquisitions relating them to industry shocks, showing evidence that reinforce the idea of that acquisitions can be an efficient reaction to economic change..…”

Lobbies, delegation and the under-investment problem in regulation

“…In the previous political equilibrium if the voters are well-informed, the government responds by maximizing (20) with α = 0. Now we allow the possibility that voters may own the regulated firm in which case a utilitarian social welfare with α = 1 is appropriate.…”