Vertical Integration in International Telecommunication System

The process of liberalization and privatization is drastically altering the links among international telecommunications carriers. The model presented in this paper analyses the international telecommunications market illustrating the effects of vertical mergers, under symbiotic production conditions, when vertically integrated and unintegrated carriers coexist. The effect of competition is analysed both in the final market and in the intermediate one where carriers compete over tariffs to get an appropriate distribution of profits. In particular, the results show the relations between final market prices, intermediate tariffs and market dimensions and their implications on profits.     

The impact of trade liberalization in telecommunications services: The case of APEC countries

This paper examines the impact of liberalizing the telecommunications services sector on investment and output in the Asia-Pacific Economic Cooperation (APEC) countries by estimating a system of four structural equations that takes into account the causal relationship between national income and telecommunications infrastructure. The degree of openness to trade in telecommunications is represented by a carefully constructed index that reflects a country’s trade and investment policy in terms of market access, national treatment and regulatory principles. One interesting finding from the empirical analysis is that the effects of trade liberalization depend on the risk rating of a country. In countries with relatively high risk ratings liberalization reduces investment in telecommunications.     

Infrastructure investment and optimal access regulation in the different stages of telecommunications market liberalization

In this paper, we compare the optimal access regulation under three different market configurations that approximate the different stages of telecommunications market liberalization. We show that in the first stage of market liberalization the regulator has to balance between static efficiency and investment and that the optimal access price may be above marginal cost. In the second stage, two different outcomes are possible. If entrants tend to underinvest, the regulator balances between static efficiency and investment. If entrants tend to overinvest, the regulator sets the access price as low as possible in order to prevent or limit infrastructure duplication. Interestingly, we find that in the third stage of market liberalization the regulator may decide to promote infrastructure duplication and to set the access price above the price in the first stage of market liberalization, even if telecommunications network operators tend to overinvest in infrastructure duplication.     

Assessing the WTO agreements on China's telecommunications regulatory reform and industrial liberalization

By drawing on new institutional economics, this paper contends that the “rules-of-law” specified by the World Trade Organization (WTO), as an exogenous institution for the member states, will theoretically influence its members’ domestic telecommunications regulatory institutions, but that the actual effects will be different and will depend on the institutional endowments of host countries and their institutional stances. Empirically, this paper examines the impact of China's prospective membership status in the WTO on its telecommunications regulatory reform and industrial liberalization and explores the institutional barriers preventing China from fully implementing the WTO Agreements in this sector.     

The Canada-US Free Trade Agreement and the telecommunications industry

The Canada-US Free Trade Agreement, which came into effect on 1 January 1989, could well prove to be a breakthrough in the liberalization of trade between the two countries. This paper highlights the provisions of the FTA that indirectly or directly affect the telecommunications industry, assesses their possible impact and evaluates their probable importance to different participants in the industry. The authors make many predictions as to the effects of this agreement in terms of both telecommunications equipment and services and foresee greater competition and larger markets.     

Symbiotic production: The case of telecommunication pricing

In this paper we analyze a generalization of vertical monopolies in which monopoly suppliers trade essential inputs with one another. The most obvious applications of the model, which we call symbiotic production, are to postal and telecommunications services. We show how producers can use per-unit tariffs to achieve cooperative outcomes without colluding directly over consumer prices. We then show the firms have an incentive to collude in the setting of tariffs but that suchcollusion will lower consumer prices. This assumes that the suppliers are otherwise unfettered. In contrast, if the constituent monopolies are regulated, we show that collusion enables the firms to completely undo the restraints of regulation. The model has important policy implications for the international telecommunications market.     

The political economy of the Korean telecommunications reform

South Korea proclaimed a gradual economic liberalization ever since the early 1980s. Regardless of her vow to do so, however, most of liberalization efforts turned out to be a sheer rhetoric. In sharp contrast, genuine market liberalization and regulatory reforms are being introduced in the telecommunication sector, which is unprecedented in the Korean economic history. Why and how could Korea pursue such a full scale market liberalization and regulatory reforms in the telecommunications sector? Though it is argued that a regulatory convergence in economic management is found in everywhere in the world, the particular speed, scope, and/or processes of a country’s telecommunication reform cannot be understood correctly without examining the structures and institutions of the Korean political economy and of the telecommunications industry. This paper examines the causes and consequences of the Korean telecommunication reform by analyzing the relevant institutional changes both in domestic and international, which largely affect the interaction among those involved in the process of market liberalization and regulatory reforms.     

Trade patterns,industry structure and industrial policy in telecommunications

This article examines three major changes which have been occuring in the telecommunications market: liberalization, leading to increased competition in services and equipment, the internationalization of the equipment market, and a rapidly changing industrial structure. The interrelationship among the three trends is analyzed, and the authors hypothesize that it is the technological determinants which are driving the changing structure of the industry and its trade patterns and regulatory environment. The instruments of industrial policy are discussed, with examples from several countries. The European Community's policy in telecommunications is explained in some detail.     

Functional separation in Swedish broadband market: Next step of improving competition

Technological development together with liberalization policy has led to competition in the telecommunications market. Broadband has been recognized as a driving force in the social and economic development of nations, and many countries have introduced policies and/or regulatory frameworks to improve competition in broadband markets. An evolution can be seen from the 1980s until the present day through open access to local loop unbundling to several degrees of separation including functional separation. There are several countries implementing functional separation such as the UK, Italy, Sweden and, recently the EU. It has been suggested that functional separation can be an effective policy for increasing competition in broadband markets under certain circumstances. Sweden has implemented functional separation by amending the Swedish Telecommunications Act in 2008 to include mandatory functional separation as one of the powers of the PTS, the Swedish telecommunications regulator. Although TeliaSonera, the incumbent fixed line operator decided to voluntarily separate part of their business, the amendments to the law were debated with arguments similar to the debates in the EU following the new regulatory framework implemented in 2009. Against this background, this paper provides an overview of the development of functional separation in the EU and European countries such as Sweden and the UK. The paper also provides a theoretical and empirical analysis of the implementation of functional separation. The evolution of functional separation in Sweden is explained and ends with a discussion of the implementation of functional separation in the Swedish broadband market.     

Strategic focus of incumbents in the European telecommunications industry: The cases of BT,Deutsche Telekom and KPN

This study investigates the internal and external strategic choices that telecommunications firms, operating in a dynamic network environment, make to adapt to changes and to respond quickly in order to create or to sustain their competitive advantage. In particular, in the European telecommunications industry incumbent firms have faced important challenges from new technologies, liberalization and the convergence of markets. The leading European telecommunications companies initially focused on new markets and new businesses, emphasizing their plans to become major players in relevant markets. However, after the telecommunications euphoria companies were more restrained due to their huge burden of debt and their market value. Through refocusing or restructuring, these companies have tried to streamline their businesses in order to restore their value and to improve their competitiveness. Insight into the specific strategic actions of traditional telecommunications companies in Europe to the recent developments in the industry is provided from the analysis of three leading traditional telecommunications companies: BT, Deutsche Telekom and KPN.     

The EU regulatory framework in telecommunications: A critical analysis

The paper analyzes the core telecommunications regulatory framework at European Union (EU) level which has been put in place since the beginning of the 1990s. We find lack of support by Member States of the European Commission’‘s liberalization program in several areas, including Member States’ resistance to rapid liberalization, cost orientation, an effective EU-wide licensing system, pro-competitive numbering policy (carrier selection), as well as EU-wide harmonized interconnection rules and universal service obligations. We also identify a number of shortcomings of European Commission measures, especially in the areas of price regulation, interconnection rules and licensing policy. To overcome these inefficiencies, we recommend the establishment of an independent European Regulatory Authorities (ERA) that is comprised of representatives from National Regulatory Authorities.     

The transformation of the mobile telecommunications industry in Pakistan: A developing country perspective

This paper offers a rare insight into the reality of the mobile telecommunications market transformation in Pakistan. Our analytical framework treats the mobile telecommunications market as a complex socio-technical system. Specifically, we define the telecommunications market as being composed of technology standards and three sets of social actors that include government institutions, network and service providers, and users. In the case of Pakistan, these social actors together determine the adoption of standards and services, and thus shape the trajectory of the market change. Our case study provides evidence that a pro-competition policy is imperative for mobile telecommunications development in developing countries, and an independent regulator is critical in promoting technological innovation.     

Concentration of the mobile telecommunications markets and countries’ competitiveness

This study examines how the level of concentration of a country’s mobile telecommunications market affects its competitiveness. We created a unique database with information on 59 countries, which we used to perform several estimations including an instrumental variable approach to explain the degree of concentration in mobile phone markets. Our first and direct estimation shows that the higher the concentration in this industry, the lower the countries’ competitiveness. In order to understand this positive correlation, we provide two additional estimations. First, using an instrumental variable, we find that the concentration in mobile telecommunications market explains the use of information and communications technology (ICT). Moreover, we also find that the use of ICT is positively correlated with countries’ competitiveness. Thus, our results confirm that the mobile phone industry has positive spillover effects on countries’ competitiveness and demonstrate the benefits of policies designed to reduce concentration and market power in the industry.     

Fueling investments - The effect of the Agreement on Basic Telecommunications

As international agreements come under fire from current politics, it becomes ever more important to investigate the effect of such agreements. The telecommunication sector is of special interest due to its growing importance in the digital age. International law came into play in 1998 when the Agreement on Basic Telecommunications (BTA) entered into force. It demanded far-reaching liberalization reforms and was signed and ratified by 66 countries. A difference-in-differences estimator is used to analyze if the treaty had an impact on investments in telecommunications. The analysis reveals that investments in telecommunications became significantly higher in signatory countries than in non-signatory countries after the treaty took effect.     

Paradoxical impact of asymmetric regulation in Taiwan's telecommunications industry: Restriction and rent seeking

The mobile penetration rate in Taiwan has climbed from 6.86 to 112.15. Mobile phone accounts per 100 capita in the first 6 years of market competition, during this time the state-owned incumbent Chunghua Telecom has been dethroned by a new entrant, Taiwan Cellular Corp. This paper addresses the cause of Taiwan's unprecedented mobile growth, and provides policy solutions for countries that strive to improve their telecommunications sectors in a short time scale. The authors highlight the fundamental role of asymmetric regulation, rather than pure liberalization, in the creation of the deregulated telecommunications industry in Taiwan. The asymmetric regulation in Taiwan is manifested in a twofold framework: the dominant carrier vs. competitors, and the fixed-line carrier vs. mobile companies. Econometric analysis concludes that dualistic asymmetric regulation leads to higher growth for mobile competitors and raises the total mobile penetration rate. However, the authors warn against the paradoxical consequences of dualistic asymmetric regulation. The regulatory benefits which mobile entrants received evolved into rents when they successfully lobbied to end the follow-me call service, the pricing scheme of which contradicts the asymmetric revenue-sharing constraint. The paper calls for a sunset clause for dualistic asymmetric regulation in order to take full advantage of its strengths, while at the same time preventing rent seeking by the firms, which benefit.     

On access pricing in telecoms: theory and European practice

This paper discusses European legislation concerning interconnection between telecommunications operators. An important and distinct element of regulatory policy in the European Union is that operators with significant market power are required to provide cost-based interconnection whereas other operators are not required to provide such cost-based interconnection. It analyzes the consequences of different interconnection charges for competition and investments. Using recent insights from the theoretical literature on competition in telecommunications, it finds that the socially optimal regulatory policy concerning interconnection has the same characteristics as that adopted in the European Union.     

英国电信产业的放松管制和对主导运营商BT的再管制

自 1 980年起 ,英国电信产业先后实施了邮政、电信分离 ,建立独立的管制机构 ,对开放市场准入和私有化以后仍然居于主导地位的运营商———英国电信公司 (BT)实施包括价格上限管制在内的一系列管制 ,促进了英国电信产业向竞争性结构的转化。目前 ,我国电信产业同样面临着放松管制以及放松管制以后如何重组和再管制主导运营商的棘手难题。本文拟对英国电信产业 2 0余年的改革经验进行比较系统的回顾和评析 ,以期对我国电信产业的下一步改革有所启示。     

Competition and telecommunications infrastructure in Ireland: A regulatory view

Against the background of EU proposals for liberalization of telecommunications infrastructure, this paper considers the impact of liberalization on Ireland and other peripheral and small economies. Ireland is characterized as on the periphery, with a small open economy and rural nature, with a big, liberalized neighbour — the UK. This makes Telecom Eireann particularly vulnerable to competition, but there is no reason why effective and appropriate regulation should not allow a smooth transition to a competitive market.     

Domestic and international impacts of the rice trade policy reform in the Philippines

Faced with high domestic rice prices that have fueled inflation above the 2018 target and penalized poor consumers the most, the government of the Philippines has decided to abandon the quantitative restrictions on imports and replace them with tariffs. This paper uses a global rice model based on a partial equilibrium framework to assess the possible impacts of this reform on imports, production, consumption and prices. In contrast with past similar studies, we address three key concerns (i) the heterogeneity in farm price across 16 regions in response to the combined effect of the tarriffication and the average historical trend in productivity increase at 1.5% between 2001 and 2018, (ii) the differentiation of imports by origin partly due to the different tariffs applied to countries within and beyond the Association of South East Asian Nations, and (iii) the effect on domestic prices in third countries. The simulation results suggest that the reform would increase imports by 2.47 million tons (20.7%) in 2019. We also find a large decline in farm prices and retail prices respectively by PhP 6.1/kg (30.1%) and PhP 7.6/kg (17.4%) in 2019 that explains an increase in rice consumption. We estimate the fall in total inflation at 1.2% in 2019 but less over time. Further, the large fall in farm prices in 2019 is shared quite evenly among regions in the short term but returns to pre-reform levels in the near term. Using a higher price elasticity of supply for one region obtained from panel data surveys, we show a more pronounced decline in production than the national average. Such differentiated results confirm the relevance of using a regionally disaggregated model to design more targeted policies. We also show a slight increase in world prices, which led to small increases in the domestic prices of South and Southeast Asian rice markets. While this reform is largely pro-poor consumers, policy makers would need to use the additional tariff revenue to help rice growers either increase their competitiveness and modernize their rice production or shift to other crops.     

Leveraging the EU regulatory framework to improve a layered policy model for US telecommunications markets

What is the best way to overhaul the current telecommunications legislative framework in the United States? This is an ongoing debate among telecom policy analysts and many others affected by the legacy of regulatory compromises that govern US telecommunications (and related information and media) industry sectors. This paper compares a Layered Model for US telecommunications policy with the regulatory framework adopted by the European Union. Both approaches focus on service characteristics rather than underlying technological traits.¹ It becomes clear that the Layered Model could be adopted to move away from sector-specific regulation, and could successfully use conventional market analysis criteria.