Long term risk sharing contracts as an approach to establish public–private partnerships for investment into next generation access networks

This paper develops an investment/pricing model for the deployment of basic broadband networks which, along with other applications, is applicable to public–private partnership projects. In particular, a new investment model is suggested to be used for finance deployment over a longer term by enabling both private and public investors to participate in the roll-out of next generation access (NGA) infrastructure. This so-called “long-term risk sharing concept” has several notable benefits compared with the traditional regulatory approach. Above all, the model enables both private operators and public authorities to share the risk of investing in NGA infrastructure. Thus the model offers a way for public authorities to achieve a timely and countrywide roll-out of NGA networks, including in areas where NGA investment would otherwise not occur.     

The involvement of utilities in the development of broadband infrastructure: A comparison of EU case studies

Energy companies and other utility providers have been often involved in the provision of telecommunications services. Nevertheless, their contribution to broadband development has varied significantly over time. In the late 1990s, both local and national utilities in the European Union (EU) engaged in the provision of broadband networks, but only few of them managed to establish themselves as major broadband providers. More recently, new projects involving national utilities have been announced in several EU countries, opening new scenarios for utilities’ contribution to Next Generation Access (NGA) development. This paper identifies and explores the factors affecting the entry and the success of utilities in the EU broadband market, through the comparison of four case studies from four EU countries (Germany, Italy, Sweden and the UK). The evolution of utility involvement in the EU broadband markets is assessed against the interaction of market, technology and policy factors, focusing on the impact of policy and regulatory measures. As a result, this paper provides fruitful insights into the relevance and effectiveness of public interventions in broadband markets. Across the four case studies, public support and public ownership emerged as the main drivers for the involvement of utilities in EU broadband markets, with regulatory measures and economies of scope exerting a limited and decreasing influence. However, the contribution of utilities has varied significantly across the cases studied, reflecting the different approaches taken at national and local level to support broadband development, in spite of the common regulatory framework.     

A study on the deployment of high-speed broadband networks in NUTS3 regions within the framework of digital agenda for Europe

This paper investigates the high-speed broadband situation in the EU and its prospects. It uses a deployment model to estimate the investment required to meet the Digital Agenda for Europe (DAE) broadband targets set by the European Commission in its Europe 2020 strategy at different stages: as of 2016, after expected operators’ deployment, after public subsidies and leveraged investment, and as expected in 2020. The model uses data at the NUTS3 level, which is the most granular level that has data available on the status of broadband deployment, to arrive at a coherent and comparable framework. From the different perspectives on the investment to meet DAE targets, the paper concludes on the need for an appropriate combination of incumbent and alternative operators investments, public subsidies and leveraged investments, and new investments, both public and private and non-existing as of 2016, examining their feasibility and the impact of different regulatory, technical, and policy strategies.     

Next Generation Access (NGA) supply side interventions—An international comparison

Over the last years, technical and economic developments towards the deployment of Next Generation (Access) Networks have triggered discussions under which circumstances investments into physical infrastructure are economically viable. In many countries the discussion has arisen regarding conditions under which private investment will/will not be undertaken and whether or not in such cases public policy measures should support deployment. This could come in different ways—from incentivizing private investments to deploying new “state-owned” networks. Public policy can have an impact for example by intervening into a competitive market. The paper tries to provide answers as to “why” such interventions and supply side policies are undertaken (thereby referring to the central role that broadband infrastructures have for the economy) and “how” such interventions take place, for example an analysis of the public policy interventions to drive Next Generation Access Network deployment. The article thereby derives policy patterns that have occurred in different regions of the world.     

Factors determining municipal broadband strategies across Europe

Recognizing that high-speed broadband connectivity emerges as a key element for growth, city authorities engage in fiber access deployments to empower their local communities in the digital economy. Currently, a growing number of municipal fiber projects are underway or planned while the international community and the telecommunications industry are yet undecided about the role and type of municipal intervention. This paper takes a holistic view of municipal broadband in Europe, aiming to understand the factors that determine municipal strategies in fixed Next-Generation Access (NGA) networks and the implications of municipal broadband to regulation and markets. The data suggests that the determining factors are (a) the engagement of public utilities; (b) the involvement of the private sector in joint infrastructure projects; (c) the local demand for retail and wholesale services; and (d) the institutional and regulatory framework at the European and national scale. The findings of the study indicate that (a) municipal initiatives are highly dependent on national factors, thus the resulting interventions fare strong resemblance within a single country, while they can be substantially different across national contexts; (b) current EU provisions for public involvement in broadband development stimulate municipal plans for large scale arrangements; and (c) national regulatory frameworks, that primarily address vertical integrated incumbents and nationwide markets, may need adjustments to handle emerging access monopolies of regional and city broadband infrastructures.     

The Investment Behaviour of Firms in an Oligopolistic Setting

Industrial organization theory has identified strategic investment in capacity as an important element in competition in oligopolistic markets. In the paper we specify a model of oligopolistic investment behaviour, and test it with panel data for 114 firms in 15 narrowly defined UK manufacturing industries in the 1970s and 1980s. The industries are distinguished according to their market characteristics as fragmented, dominant firm and dominant group sectors. The results indicate behaviour which is noncooperative in fragmented sectors, cooperative in dominant group sectors and competitive in dominant firm sectors.     

Regional differences in residential demand for very high bandwidth broadband internet in 2025

The future demand for data and the role of gigabit networks are central issues in the context of Next Generation Access (NGA) network roll-out. Based on a generic model, which allows to predict unconstrained future broadband demand in different regions and countries, the authors compare the results for Germany, the UK and the Flemish region, and discuss reasons for the different outcomes. The generic market potential model thereby allows to project the future demand for bandwidth from residential customers on the basis of applications and their bandwidth needs, user profiles and population structure on a household level. Despite a general trend towards an increasing need for broadband, there are clear differences. On the one hand, these point to the relevance of socio-demographic factors for broadband adoption. On the other hand, the relatively high proportion of refusals shows that there is still a need for further educational work on the part of public authorities and providers. Finally, it has to be stated, that our forecast relies on the assumption that connectivity and thus that the availability of area-wide gigabit capable broadband access does not represent a bottleneck.     

Infrastructure investment on the margins of the market: The role of niche infrastructure providers in the UK

Across Europe, policymakers and market forces are striving to deploy next generation access (NGA) networks and ensure ubiquitous access to superfast broadband services. Due to scale economies and sunk costs, the roll-out of NGA is expected to be profitable only for large-scale providers and in densely populated areas. Nonetheless, alternative providers, such as utilities and local communities, have significantly contributed to NGA diffusion in many countries. Over the past five years, several small-scale initiatives have emerged in the UK, bringing fibre networks to urban and rural areas previously overlooked by either commercial or subsidised deployments. A multiple case study approach is employed here to explore the nature and the drivers of niche providers in the UK NGA market. All these initiatives are demand-driven and to follow a modular approach. Despite adopting different business models, they all rely on the resources inherited from past broadband initiatives and relationships with local partners. By investigating the strategies of niche providers in NGA market, this analysis sheds light on their contribution to bridging the digital divide in the UK and is presented as a preliminary assessment of their sustainability and potential growth.     

中美市场投资者惯性和反转交易偏好的实证研究

为了探索中国和美国证券市场的惯性和反转收益异常现象差异,本文参考了Jegedeesh和Titman的累计超额收益CAR研究方法,选取了2000年1月~2020年2月美国证券市场和中国证券市场股票数据构建了不同时期的收益期和检验期惯性和反转策略。为了检验结果的稳健性,本文还加入24个月和36个月的窗口期。同时,为了比较两国投资者之间的投资差异,本文构建惯性策略并选取企业规模、价值和波动3个指标来衡量两国间投资者差异。结果表明整体美国市场短期内具有明显的动量效应,而中国市场在短、中、长期都具有显著的反转效应。两个市场中,中国市场的投资者偏好小市值、高成长价值和高波动性的股票,而美国投资者则偏向大市值股票和低波动性股票。基于两个市场的差异(新兴市场和有效市场),本文找到了一些美国市场的先进投资经验,它对规范我国投资市场有重要的借鉴意义。     

Investments in next generation access infrastructures under regulatory uncertainty

This article studies the impact of regulatory uncertainty on an incumbent’s incentives to undertake the socially optimal investments in NGA networks. Thus, a regulatory non-commitment setting in which the regulator sets the access price after the deployment of the NGA network is used. In particular, it is assumed that the regulator sets the access price at the marginal cost of providing the access with some probability and gives an access markup, which equals the average cost of the investments, with the complementary probability. It is found that when the slope of the marginal investment cost function is not particularly steep in relation to the impact of investments on demand, the incumbent underinvests compared to the socially optimal investment level. On the contrary, in a more realistic case when the impact of investments on demand is low in relation to the slope of the marginal investment cost function, the incumbent may overinvest or underinvest depending on the probability of incorporating an access markup into the access price.     

Comparing FTTH access networks based on P2P and PMP fibre topologies

There is an ongoing discussion in the market which Next Generation Access (NGA) architecture best suits future needs and which investment and cost differences exist. The discussion can be subsumed as P2P vs. GPON, which is somewhat misleading as this article reveals. The discussion is driven by the fact that the high capital cost and the long asset life time of fibre mean that the technology choices made today will dominate the opportunities for telecommunication business of all market players, incumbents, competitors, content providers and business and residential users for many years in the future.The paper analyzes the cost and other differences between Fibre-to-the-Home (FTTH) access network architectures and their related different wholesale approaches by using the well-known and understood steady state approach applied in other NGA analyses in the past. In addition to the steady state analysis a dynamic cost evaluation is included taking into account the different investment behaviour of the FTTH architectures over time. The results describe investment and cost differences between architectures, incumbents and wholesale based competitive operators. The analysis has been performed for different geotypes (clusters) of decreasing population density in a representative European settlement structure.     

Governance and game theory: When do franchise auctions induce firms to overbid?

The use of auctions as an instrument of public policy has been hailed as evidence of the utility and validity of game theory. In this paper, we focus on extreme cases – centrally, spectrum auctions in the UK and Germany in 2000 – to argue that the canonical game theoretic interpretations of firm behaviour in some (highly “successful”) auction outcomes are inadequate, that the economics of governance critique of franchise bidding can be extended to provide a better interpretation, and that under specified conditions, notably high uncertainty, policy-makers should design franchise auctions to avoid overbidding, rather than attend to the more conventional challenge of underbidding.     

Accelerating the development of Latin American digital ecosystem and implications for broadband policy

In the past ten years the Latin American and Caribbean region has been advancing in terms of various digitization metrics, such as the deployment of broadband infrastructure, and the adoption of the Internet and social media. However, despite the significant progress in terms of digitization of consumption,¹ the region faces still some important development challenges of its digital economy. This paper attempts to identify what the future challenges are for Latin America and the Caribbean, which raises a number of research and policy questions: (1) How close is consumer digitization in Latin America and the Caribbean to the levels observed in industrialized countries? (2) How should Latin America and the Caribbean address the broadband and Internet demand gap of the non-adopting population? (3) Are current digitization trends homogeneous across countries in the region or do we observe a divergence across countries, indicating some advanced nations approaching industrialized country performance, while others lagging? (4) If infrastructure and consumer adoption of certain digital products and services is evolving at a fast pace, what are the upcoming digitization challenges? (5) If broadband is a critical lever for the development of digitization, what are the policies to be implemented by Latin American and Caribbean governments to maximize investment for deployment of last generation technologies and promote adoption? To answer these questions the authors have developed, with support of CAF Latin American Development Bank, a comprehensive digitization index. This new index is used to assess the development of Latin America and the Caribbean region vis-à-vis industrialized countries. On this basis, an econometric model is developed to measure the economic development impact of digitization. Zeroing in on broadband as a critical lever for the development of the digital economy, a set of infrastructure investment and adoption goals is defined for different countries in the region. Finally, public policies are recommended to achieving the established goals.     

MERCHANT TRANSMISSION INVESTMENT*

We examine the performance attributes of a merchant transmission investment framework that relies on ‘market driven’ investment to increase transmission network capacity needed to support competitive wholesale markets for electricity. Under a stringent set of assumptions, the merchant investment model has a remarkable set of attributes that appears to solve the natural monopoly problem and the associated need for regulating electric transmission companies. We expand the merchant model to incorporate several attributes of wholesale power markets and transmission networks that the merchant model ignores. These include market power in wholesale electricity markets, lumpiness in transmission investment opportunities, stochastic attributes of transmission networks and associated property rights definition issues, strategic behavior by potential merchant transmission investors and issues related to the coordination of transmission system operators and merchant transmission owners. Incorporating these more realistic attributes of transmission networks and the behavior of transmission owners and system operators leads to the conclusion that several potentially significant inefficiencies may result from reliance on the merchant transmission investment framework. Accordingly, it is inappropriate for policymakers to assume that they can avoid dealing with the many challenges associated with stimulating efficient levels of investment in electric transmission networks by adopting the merchant model.     

Investigating the intertwining impact of wholesale access pricing and the commitment to net neutrality principle on European next-generation access networks private investment plans: An options-game application for capturing market players' competitive interactions

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.     

Market reform and private trade in Eastern and Southern Africa

This article reviews the experience of market reform in Eastern and Southern Africa and highlights some key lessons learned. A distinction is drawn between countries whose policy regime before reform was favourable to food production and those whose policies were unfavourable, and alternative reform paths are described. The two key issues emerging are the role of the public sector after reform, for which there is still no clearly appropriate model, and how the strong short-term response of the private sector to trading opportunities can be transformed into investment. Post-reform markets have been competitive, but operate under tight constraints with little evidence of significant capital accumulation. Critical research issues to inform policy making are identified.     

Mapping technological capabilities into product markets and competitive advantage: the case of cholesterol drugs

While a lot of attention has been paid to those characteristics of capabilities that give firms a competitive advantage, a lot less attention has been given to supporting empirical evidence and to the deployment of these capabilities. This paper presents a model for mapping firm capabilities into customer value and competitive advantage in different markets. With empirical evidence from cholesterol drugs, I illustrate how the model can be used to estimate customer value and competitive advantage from technological capabilities. Copyright © 2002 John Wiley & Sons, Ltd.     

The Importance of Social Capital to the Management of Multinational Enterprises: Relational Networks Among Asian and Western Firms

Social capital is an important concept for multinational firms. Firms operating in global markets rarely have adequate resources to compete effectively in global markets; they access the needed resources through formal and informal relationships with other firms. The cultures in Asian countries have emphasized relationships much more strongly than Western firms. Thus, relational capital, based on guanxi (China), kankei (Japan) and inmak (Korea), provides the framework for business dealings in many Asian countries. As a result, the social capital of many Asian firms gives them a potential competitive advantage in global markets. Western firms must develop social capital and learn to manage relational networks to gain and sustain a competitive advantage in global markets. Western firms can learn how to develop and manage social capital from Asian firms. Alternatively, social capital has some disadvantages. Firms are limited by their networks and thus experience opportunity costs and path dependence. Additionally, while Asian firms often have strong network ties in their domestic markets, they have to develop many more ties globally to operate effectively in global markets. As a result, the development and management of social capital has become of critical importance for competitive advantage in global markets.