Race to the top: Does competition in the DSL market matter for fibre penetration?

High speed broadband creates potential productivity gains and has a positive impact on economic growth. Achieving Europe's broadband access objectives will require large scale investment in next generation broadband networks, and it is imperative that an appropriate investment climate is created to encourage fibre network rollout. This study considers whether and how competition in the DSL market affects the incentives of operators to invest in the deployment of high-end fibre optic networks. Most earlier research on the drivers of investment in broadband technology has focused on the effect of mandatory access policies, such as local loop unbundling, or competing infrastructures. We posit that competition in the DSL sector may also influence fibre penetration, possibly to a considerable extent. We find that the relationship between service-based competition and fibre penetration is non-linear: a lack of or severe DSL competition is correlated with a negative effect on fibre penetration, but if a moderate degree of competition is already present in the market, more service-based competition may positively influence fibre penetration. The scale of these effects however varies with the openness of the DSL market: operators' incentives to invest in fibre appear to be more sensitive to changes in DSL competition if there is extensive local loop unbundling.     

Unbundling the incumbent and deployment of high-speed internet: Evidence from France

In this paper, we study the impact of competition on the legacy copper network on the deployment of high-speed broadband. We first develop a theoretical model, which shows that the relation between the number of competitors and investment in a quality-improving technology can be positive if the quality of the new technology is high enough, and is negative otherwise. We test these theoretical predictions using data on broadband deployments in France in more than 36,000 local municipalities. First, using panel data over the period 2011–2014, we estimate a model of entry into local markets by alternative operators using local loop unbundling (LLU). Second, using cross-sectional data for the year 2015, we estimate how the number of LLU entrants impacts the deployment of high-speed broadband with speed of 30 Mbps or more by means of VDSL, cable and fiber technologies, controlling for the endogeneity of LLU entry. We find that a higher number of LLU competitors in a municipality implies lower incentives to deploy and expand coverage of high-speed broadband with speed of 30 Mbps or more.     

Unbundling and infrastructure competition for broadband adoption: Implications for NGA regulation

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.     

Examining the prospects for Gigabit Broadband: Lessons learned from Google Fiber

This study examines possible lessons learned from the deployment of residential Gigabit networks based upon the novel approach taken by the Google Fiber project started in 2010. Even though Google Fiber paused any project expansion in 2016, calling into question the viability of their business model, the approach taken by Google Fiber elicits further research interest given four major innovations that this analysis identifies in its fiber-to-the-home business model. Based on a “top-down” financial model to estimate the costs of fiber deployment, this analysis shows that these four innovations pursued by Google Fiber, and now adopted on a widespread basis by other broadband providers, lower the costs of building residential Gigabit networks, and therefore can improve the prospects for new entry of service providers of residential broadband services. With technology advances pointing to further cost reductions in the cost of Gigabit networks, this analysis elevates the need for more detailed study of ongoing changes in the cost structure of local access networks to better anticipate future prospects for broadband competition.     

Facilities to service based competition,not service to facilities based,for broadband penetration: A comparative study between the United States and South Korea

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.     

How to price the unbundled local loop in the transition from copper to fiber access networks?

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.     

Improving the FTTH business case–A joint telco-utility network rollout model

Fiber to the home networks are seen as the most future proof technology to offer increasing bandwidth to customers. The publication of the Digital Agenda has put forward challenging goals for the broadband connectivity in Europe, but the rollout of next generation fixed access networks is still lagging. One of the reasons is the high initial investment cost associated with the rollout of these networks. To decrease this cost, a cooperation model between utility operators during the deployment phase is proposed in this paper. A model has been developed, in order to optimize the position of the different infrastructures in the trench and to allow for a fair allocation of the different costs incurred between all cooperating parties. The combination of these models has shown that a synergetic deployment phase of new infrastructures, both in Greenfield and Brownfield installations, can decrease the deployment costs for fiber infrastructure up to 21%.     

Fiber-broadband-internet and its regional impact—An empirical investigation

I analyze a quasi-natural experiment of fiber broadband rollout in a rural German county and investigate the impact on real estate values. I find that there are strong and significant effects of fiber broadband deployment, which indicate relevant personal benefits for customers. These findings add to the literature on the evaluation of broadband infrastructure investment.     

Evaluating the effects of ICT core elements on CO2 emissions: Recent evidence from OECD countries

This research aimed to inform policymakers about the actual climate relevance of the information and communication technology (ICT) ecosystem, which includes data centers and content provision, broadband networks, and consumer devices. To provide robust empirical evidence on the net environmental impact of these core ICT elements, we used OECD panel data for 34 Member States for the years 2002–2019 and panel fixed-effects regression models. In contrast to previous literature, we measured basic broadband and new fiber-based wireline broadband and 3G/4G mobile broadband network deployment. We also captured variations in end-user devices, ICT affinity, and famous online content. We found that, on average, the CO₂-reducing effects appear to outweigh the CO₂-increasing effects. In particular, we found that, in addition to the reduction effect associated with the use of basic broadband connections, there is a further, albeit smaller, reduction effect associated with new fiber-based broadband connections. Other ICT elements showed insignificant coefficient estimates, suggesting largely offsetting environmental impacts. Our main findings were subject to various robustness checks and were broadly consistent with previous literature using data from developed countries. Our results suggested that old and new broadband networks as enabling technology could generate positive environmental effects for society.     

The ladder of investment in Europe,in retrospect and prospect

The ladder of investment was adopted by many European (and other) regulators in the era of copper networks as a means of implementing unbundling in a way which progressively promotes competitive providers׳ infrastructure investment in fixed networks. The paper reviews the evidence of its application and effects, in comparison with the most likely alternative, argues that it probably conferred benefits. In the more recent era of transition to fibre in Europe, regulatory priorities have shifted towards promoting roll-out. Two broad approaches are identified; one continues the focus on a programme of infrastructure competition in taking fibre to the home; another, relying on fibre to the cabinet, reverses it with bitstream used as the access product. It is soon to evaluate the two approaches.     

Estimating broadband diffusion in the EU using NUTS 1 regional data

In this paper we use panel data on NUTS 1 regional data for 27 EU countries in the years 2006–2010 to analyze determinants of broadband diffusion. We estimate both linear demand specification and the logistic diffusion function. We find that, after controlling for regional differences due to socioeconomic factors, inter-platform competition approximated by an inter-platform Herfindahl index has a significant positive impact on broadband diffusion. Broadband deployment is lower in countries in which DSL has a greater share in Internet access and it is higher in countries in which cable modem has a greater share in Internet access. Moreover, we find that competition between DSL providers has a significant and positive impact on broadband penetration. First, higher prices for a fully unbundled local loop connection, which represent the cost of providing copper-based Internet services, have a significant and negative impact on broadband penetration. Second, a greater incumbent share in DSL connections has a significant and negative impact on broadband penetration.     

A CDS approach to induce facilities-based competition over NGA networks

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.     

Rolling out of fibre optic networks in intermediate versus urban areas: An exploratory spatial analysis in the Netherlands

Within the growing literature on broadband development, much research has focused on infrastructure competition and spatial effects driving investment incentives in broadband provision. However, less attention has been paid to the geographical factors explaining very high capacity fibre based network rollout. The purpose of this paper is to examine these geographical effects of rollout of these networks by utilizing basic data mining techniques in conjunction with exploratory spatial data analysis. In explaining the rollout of these networks, the paper derives from the literature a geographical model on broadband provision and examines it empirically by focusing on the spatial and temporal effects driving very high capacity fibre-based network development in the Netherlands. The paper confirms previous research on market uncertainty and the techno-economics of broadband development, but shows, in addition, that more specific factors related to local effects and demand uncertainty are vital in explaining the rollout of very high capacity fibre-based network.     

Local competition and the role of regulation: the EU debate and Britain's experience

Competition in local access networks and local loop unbundling have been central in the 1999 review of the EU communications regulatory framework. These issues also figure high on national policy agendas. Competition in local access is thought to stimulate internet penetration and the development of e-commerce and interactive applications, all key elements for the move towards a ‘new economy’. Following an analysis of different ways to promote competition in local access networks and a review of the respective EU debate, this paper then concentrates on the relevant developments in Britain. At a broader level, it explores the interplay between EU debates and British policies and actions and the scope for harmonisation of national regulatory regimes. At a more specific level, the paper assesses the evolution of local access competition and relates this to the role of regulation and the question of facilities- vs. services-based entry. It is argued that the introduction of new market restructuring initiatives, such as local loop unbundling, requires a larger involvement by regulators, particularly in the early stages, rather than just a reliance on general competition rules.     

Ultra-fast broadband investment and adoption: A survey

In recent years, and in line with EC plans, telecom operators have been facing the need to deploy high-speed, fiber-based infrastructure. What is the socio-economic impact of these new investments on growth and local development? What are their effects on the labor market outcomes, in terms of firm productivity and entrepreneurship? What is the role of regulation and competition in spurring the deployment and the adoption of ultra-fast broadband networks? In this survey, we review the existing literature on ultra-fast, fiber-based broadband network, devoting special attention to the results and to the methodology used in the most recent studies.     

Maximizing the adoption of fixed number portability within the EU: An empirical analysis

Number portability (NP) is considered by the European Commission as a key measure for promoting competition within the telecom sector especially regarding network access infrastructure. However, NP requires several modifications to the network architecture and to the business processes of each operator that, depending on network size, may result in a significant financial cost. This is true for fixed networks in particular. Given the requirement for such an investment, National Regulatory Authorities (NRAs) desire a clear picture on what to expect, in terms of progress in access competition, when introducing fixed NP in their respective markets. The paper approaches this question by correlating several fixed telephony market indices related to access competition to the degree of success of fixed NP. Relevant analysis based on European Union member states’ data indicates that fixed NP does not significantly contribute to local loop unbundling (LLU) adoption in markets where there are other access technologies available. In these markets, access competition via these other technologies and fixed NP initially achieve similar penetration rates. Consequently, when access competition exceeds a certain threshold and given a reasonable pricing regime then fixed NP is further boosted to include broadband connections based on several broadband technologies/methodologies such as LLU and cable as well as existing narrowband access technologies (e.g. narrowband cable connections). In markets where LLU is the only alternative for access then the rate of Fixed NP adoption is directly correlated with the success of LLU. Consequently, these conclusions are considered within a high-level stepwise approach for NP implementation, which is based on the experience acquired from the respective Greek national project.     

Flexibility and broadband evolution

This paper focuses on the question of which broadband technologies that are currently available (and/or under development) enable evolutionary paths for broadband (symmetrical bandwidth of 10 Mbps¹) deployment in the local loop, leaving options open for new developments. The paper is relevant to policymakers and telecommunication operators who are faced with emerging technologies and who need to make short-term decisions about upgrading networks under risk and uncertainty. The concept of evolutionary paths and the advantages involved, such as smaller and more flexible investments and an increased adaptability to market developments, are addressed. Several wired and wireless transmission media are discussed on the basis of criteria like network capacity, reach, compatibility, standardization, maturity and technical and geographical scalability. Broadband technologies like ADSL2+, Etherloop, EFMC, CMTS+, Narad networks; EttH, EPON, APON, Optical Ethernet, LMDS, MMDS, FSO and HFR are assessed on the basis of these criteria. Starting from this assessment, migration paths for copper, cable and wireless technologies are presented and discussed.     

Dynamic Entry and Investment in New Infrastructures: Empirical Evidence from the Fixed Broadband Industry

In the telecommunications industry, the ladder-of-investment approach claims that service-based competition (when entrants lease access to incumbents’ facilities) can serve as a “stepping stone” for facility-based entry (when entrants build their own infrastructures to provide services). In this paper, we build an empirical model that encompasses a complete ladder-of-investment, composed of three rungs: bitstream access, local loop unbundling and new access facilities. Using data from the European Commission’s “Broadband access in the EU” reports covering 15 European member states for 17 semesters, we test the ladder-of-investment hypothesis. We find no empirical support for this hypothesis, that is, for the transition from local loop unbundling to new access infrastructures, and weak empirical support for the transition from bitstream access lines to local loop unbundling. These results are robust when we take into account the migration effect, the number of access rungs, the development of broadband cable, the regulatory performance, and the evolution of local loop unbundling prices.