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Whilst the deployment of next generation access networks (NGANs) is undoubtedly beneficial to the economy, new legal developments in the United States (US) regarding the issue of net neutrality (NN) pose a new challenge not only to policy makers but to telecommunication providers as well, that could justify a fresh approach when assessing NGANs investments. In particular, the Federal Communications Commission (FCC) subverted extant NN rules in the US and if the European Union (EU) decides to follow a similar deregulatory path in the future it could change the way telecommunications providers on both sides of the Atlantic lay down their optical-fibre network infrastructure investment plans. For instance, if traffic prioritization is allowed then diversification of revenue sources can be achieved by charging customers for privileged data delivery to their premises. Currently, NGANs roll-out throughout EU is an ongoing process in a setting whereby access regulation in the form of network element unbundling is already imposed. As a result, these legal developments form a new context within which it makes sense to assess the role of NGANs wholesale access pricing in tandem with the degree of commitment to NN rules so as to i) determine their combinatorial impact on private telecommunications operators' financial figures and ii) capture their competitive interactions. Towards this end, an important aspect of particular value to market players (i.e. incumbents and competitive providers – CPs), and policy makers (i.e. National Regulatory Authorities – NRAs) that this article aims to examine is how to employ the option-game (OG) analysis, that reflects the intersection of game theory (GT) and real options (ROs), to model the competitive interactions between participants in a particular competition game set-up by means of deriving possible Nash-equilibrium (NE) outcomes within a regulatory setting part of which is the commitment or non-commitment to the NN principle. This, hybrid, evaluation tool is applied on top of a conventional discounted cash flow (DCF) techno-economic analysis assessment of an NGAN investment opportunity.

This contribution reports on the development of a performance index and underlying market model with application to broadband developments in the European Union. The Structure-Conduct-Performance paradigm provides the theoretical grounding. Structural equations modelling was applied to determine the statistically significant factors and components in the path model. The data set was derived from public sources combined with a questionnaire completed by the national regulatory authorities. The data collection took place in the period May 2012-December 2012. In this contribution we focus on fixed broadband. The Broadband Performance Index resulting from the analysis consists of: the cumulative broadband uptake (across all technology platforms); the average monthly revenues per user; and the percentage of broadband households with a data rate above 10Mbit/s on the down link. The most important factor representing firm conduct and the main driver of broadband performance is the level of investment, which is in turn driven by GDP/capita. The factor best representing market structure is a modified Herfindal Hirschman Index (HHI*) capturing the platform-based competition (PSTN, CATV, FttH, and the market shares of access-based competitors). The HHI* is in turn driven by the wholesale price for unbundling and by the degree of urbanization. The resulting performance index values range from 73 to 121, with the EU average set at 100. A measurement instrument for broadband monitoring and policy evaluation is proposed.The development of a broadband market model and performance index are described.The model and index are fully data driven, using public sources and a questionnaire.The model and index are developed using structural equations modelling.A technology-platform based HHI* is proposed to replace the traditional HHI.

The common idea of open access policy is that it refers to the sharing of particular elements, such as wholesale access networks, backhaul, under-sea cable and internet exchange points in fixed and mobile networks. In broadband networks, the use of open access policy usually refers to the infrastructure parts, which are considered a bottleneck. Many regulators have generally focused open access policy on fixed broadband networks, especially digital subscriber line (DSL) technology, in the last decade. Local loop unbundling (LLU) regulation is one of the main strategies for the regulator to open access to an incumbent's bottleneck network in order to soften its monopoly power and encourage competition in the DSL broadband market. The OECD countries have different strategies regarding unbundling local loop and infrastructure competition, as the characteristics and infrastructure networks of countries vary. There are currently more choices of next generation network (NGN) technologies to develop. While local loop unbundling may not be applied fully to NGN development (the cost is not sunk, more technologies are available to implement, incentive of investment by operator), it can indicate benefits and drawbacks of open access policy in the past decade that can be adapted to NGN.The empirical results of this study show that during 2002-2008, LLU regulation was one of the strategies used to increase broadband adoption in countries that had difficulty encouraging infrastructure competition. Unbundling regulation can therefore be implemented carefully and differently in each country that has inefficiency that is harmful to consumers in its market from a monopoly incumbent. Infrastructure competition, on the other hand, is introduced as another strategy to increase broadband adoption. The empirical results of this study indicate that infrastructure competition can be used as a strategy when there are already enough infrastructures in the area or country. These results support the idea of using open access and infrastructure competition policy depending on the existing competition of broadband infrastructure in each country. Impact of unbundling and infrastructure competition on broadband adoption.Representing the concept of infrastructure sharing as well as open access policy.The use of policy depending on the extent of competition in broadband infrastructure.

The current regulatory framework in the European NGA market provides the basic principles for the gradual migration from service-based competition over the legacy copper access networks to facilities-based competition over fiber-based Next Generation Access (NGA) networks. This paper initially reviews the related literature and shows that: (i) an unbundling policy that boosts entry by alternative operators promotes service-based competition but provides operators with disincentives to invest in network upgrade; (ii) there is no consensus about the optimal regulatory policy that promotes competition and encourages investments in NGA networks; and (iii) the reviewed research articles are not consistent with the current regulatory framework in the European NGA market in terms of both the evolution of the regulatory goals over time and the recommended regulatory settings. This paper aims to propose a novel approach in order to effectively meet the current regulatory goals using the recommended settings. It is shown that the proposed approach, which is based on the basic principles governing a Credit Default Swap (CDS), provides an effective migration path towards facilities-based competition over NGA networks.

Network operators are increasingly competing with triple play offers from cable providers for both broadcast customers and telecommunications customers. In recent years they have invested in IPTV platforms and launched their own IPTV services. This has brought a new question on the regulatory agenda: shall network operators be obliged to offer wholesale access to their IPTV platform? And if yes, should the new wholesale IPTV product be regulated in the same way as traditional wholesale access? Or should traditional regulation be modified? While the majority of countries have so far no regulatory rules in place, some national regulators have started to become active in this market segment. In order for alternative network operators to realise multiple play offers including IPTV they must be able to match the offers of the incumbent operators. Such replicability with respect to telecoms infrastructure is in principle no problem as long as regulatory rules on local loop unbundling and related facilities are in place. But what if incumbent operators are neither required to offer unbundled access to their FTTH local loops nor do alternative network operators have access to sub-loop unbundling? It is for this reason that many argue some form of direct access to the incumbent multicast equipment needs to be provided. Otherwise the provision of IPTV services will be restricted to large network operators. The paper demonstrates that the regulation of wholesale access to IPTV depends above all on country specific conditions. Ex-ante regulation of access to wholesale broadband services over any DSL technology and any transport technology (ATM and Ethernet) in the sense that the SMP operator is obliged to offer a multicast functionality that allows competitors to offer TV services should be bound to a number of requirements: (1) the demand characteristics such as demand for bundled products. A precondition for determining regulatory obligations with respect to the provision of wholesale access to IPTV platforms should be that multiple play offers are the dominant form of providing telecom services. (2) The lack of cable TV operators exerting competitive pressure at the retail level for triple play products. (3) A lack of LLU in the country, so that alternative operators need a multicast WBA access to offer multiple play services. The paper is organised as follows. The first section of the paper briefly describes the technical and market characteristics of wholesale IPTV access. The second section considers the impact of IPTV wholesale access regulation on competition, investment and broadband diffusion. The third section examines regulatory issues concerning access to wholesale IPTV in more detail. The final section gives key recommendations for a regulatory strategy on wholesale broadband access to IPTV.

As a fundamental infrastructure in the Era of Information, a broadband network has a significant impact on democracy, economy, and society, indicating the importance of policy to increase broadband penetration. Considering the characteristics of broadband as a network, many governments introduced service-based competition, which is assumed to lower entry barriers by allowing entrants to lease incumbents' facilities, as a stepping stone to facilities-based competition. Questioning this unidirectional approach, the present study examines how the direction of policy implementation, that is service- to facilities-based versus facilities- to service-based, affects broadband diffusion. Through the case study of the U.S. and South Korea which experienced both modes of competition in opposing temporal sequences, this research concludes that facilities- to service-based competition might contribute to higher and faster broadband diffusion than service- to facilities-based competition. Rather than impose unbundling obligations against incumbents, facilities-based competition with financial support of the government to entrants seems to induce an earlier peak in broadband penetration. Additionally, consistent commitment of the government enforcement appears to be critical in implementing service-based competition. Though limited to the cases of the U.S. and Korea, this study suggests that service-based competition may be neither a necessity to facilitate broadband diffusion nor a precondition to introduce facilities-based competition. Moreover, service-based competition policy can function to deter overbuild of facilities and lessen the financial burden of broadband service providers if adopted after an initial period of facilities-based competition policy, which includes government investment in broadband facilities, that seems to help promote competition and give incentives to construct networks. Contrary to the literature, the present study raises a new perspective of the role of service-based competition as an enhancer for service quality and that of facilities-based competition with government investment as a booster of early and rapid broadband diffusion.

Regulation and other forms of public policy toward infrastructure industries were and are designed to support large-scale investment. Throughout history, with few exceptions, rather pragmatic approaches guided policies. A more rigorous lens was only applied more recently although it often focused on narrow aspects of regulation. In contrast, this paper attempts to develop a broader, integrated framework to analyze the effects of regulatory and other public policy choices on sector investment. During the past decades, regulation has gradually abandoned instruments that allowed regulators to influence investment decisions directly. Presently used forms of wholesale regulation such as unbundling and network neutrality requirements work indirectly, creating complex and sometimes contradictory incentives for the affected stakeholders. Regulation cannot anymore "control" investment. Rather it functions as a "tuning variable" that influences the level and the structure of investment activity in various direct and indirect, often non-linear ways. Fiscal and monetary policy instruments also can be used to influence investment choices but they have their own advantages and disadvantages and do not work under all conditions. Due to the multi-faceted effects of regulatory measures, fiscal and monetary policy is preferable to regulatory measures to create short term economic stimulus. Whereas the overall effects of a combination of regulatory and other public policy measures on communications sector investment levels and structure are difficult to predict, basic guidelines for the design of a coherent approach can be specified.

We empirically estimate the substitutability of fixed and mobile services for telecommunications access using a large, US household survey conducted over the period 2000–2001. Estimated cross-price elasticities confirm that second fixed line and mobile services are substitutes for one another. The extent of fixed-mobile substitution has important implications for policy toward fixed network unbundling, fixed-mobile vertical separation, and universal service.

“Open access” would allow ISPs to use a cable operator's broadband connection under regulated terms and conditions. Advocates stress the desirability of an “end-to-end” architecture for the Internet and the danger that cable operators will use their control over the last mile to limit consumer choice and stifle innovation. Opponents contend that wholesale price controls and other regulatory burdens under what they term “forced access” would in fact slow down the deployment of broadband, stifle innovation and harm consumers. The fears of “open access” advocates seem largely speculative at this point. Evidence from related policies also favors the opponents. “Closed” cable systems are beating their “open” DSL competitors in the market place; analogous regulation of cable TV did not serve consumers well; and forced “unbundling” of local service has been controversial and largely ineffective. In addition, relevant technology stocks declined in price with political and legal victories for “open access” and increased when it suffered setbacks.

A number of countries around the world are trying to promote competition at the local loop as demand for higher bandwidth to the home increases. Different technologies (xDSL, cable modems, and wireless local loop) offer alternative solutions and the issue for regulators is to design a framework that promotes competition and investment. Regulators can promote competition in a number of ways, but two “pure” strategies are services and infrastructure competition. This paper models the regulator and incumbent–entrant interactions explicitly in order to understand how the structure of the voice services might evolve under different regulatory frameworks. Our analysis suggests that a “mix” of infrastructure and service competition like the one promoted in Netherlands, stimulates investment by incumbents and entrants alike and offers better consumer benefits. The message for policy makers is that the introduction of “sunset clauses” provides new entrants with strong incentives to invest while allowing them to enter in service competition and to acquire important knowledge about their new market.

This article examines the regulatory issues surrounding Operational Support Systems (OSSs). Equal and non-discriminatory access to the incumbents’ OSSs, which perform a number of functions and are critical in market differentiation for operators, is a key element in enabling meaningful competition. This article assesses the regulation of access to OSSs in the US and the EU. It concludes that, as attention now turns to competition in access networks, resale and local loop unbundling, regulators have an important role to play in putting forward guidelines concerning minimum requirements for access to OSSs so as to enable real competition.

This paper presents a view of the changing structure of corporate R&D in telecommunications – one that is close to Adam Smith’s insightful and enduring idea of division of labor – that perhaps we are witnessing the beginnings of vertical disintegration and unbundling of important segments of the industry’s R&D activity. The paper maintains that the emergence of an independent software industry – aided by the convergence of computer, telecommunications and imaging technologies – and the rapid growth of technology-based alliances are at the heart of this trend. So extensive is the vertical disintegration of R&D that, in 1997, the top 10 independent software vendors in the US spent more on R&D than the combined spending by AT&T and Lucent whose sales were well over three times as large. It appears that the source of future innovation in the telecommunications industry lies not in its services segment but rather in telecommunications and Internet equipment firms and independent software firms. Increasingly, the fortunes of large service providers like AT&T will depend less on innovation and more on their ability to configure and market complete one-stop-shopping solutions to customers by combining internal resources with outsourced technologies, products and services.

This paper presents a summary of the theoretical debate on the advantages and disadvantages of asymmetric regulation. Recent positions on this debate can be broadly divided into two categories: (1) supporters of symmetric regulation; and (2) supporters of asymmetric regulation. The authors then analyse recent regulatory reform in France, Germany, the UK and US (with references to European Union policy) in terms of whether local policies on entry (licensing, cross-sector entry) and operation in a market (interconnection and access, unbundling and number portability) are more or less asymmetric. The analysis has brought to light a number of macrotrends that may be useful in determining policy guidelines.

This paper illustrates the need for a continuing and more focused role for regulation in the face of competitive entry in communications infrastructure supply. It reviews the trends in the marketplace and points to the critical sites where long-term industry outcomes are being negotiated, including the terms and conditions of network interconnection, the degree to which network operators are obliged to unbundle network functionality, and the political and economic choices as to who bears the costs of the underlying information and communications infrastructure.

This article raises questions as to whether ‘supercarriers’ will contribute to the ‘unbundling’ of present export control systems for two reasons. First, there are distinct regional and national concerns about the continued exercise of US extraterritoriality through its export control legislation and COCOM. This prompts a possible formation of regional export control regimes, especially when governments are becoming less tolerant of external institutional arrangements that prejudice their firms. Second, electronic information flows are unique. The main conclusion is that a one state-dominated and multilateral system of governance of ‘supercarriers’ will be increasingly less tenable in the evolving political economy.

The Federal Communications Commission's Open Network Architecture (ONA) programme is initially intended to provide equal access to the local exchange network by protecting against local exchange company discrimination against competing enhanced service providers. The principle of ONA, which at its core involves unbundling basic services, can be extended to promote competition to the local exchange company in the provision of regulated basic services as well as unregulated enhanced services. This article evaluates the arguments for and against interstate basic services competition and provides a set of recommendations that will facilitate competition.