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.     

Fibre-to-the-home,high-speed and national broadband plans: Tales from Down Under

In recent years governments in many countries have acknowledged the higher complexity involved in finding the more efficient path towards a so-called broadband ecosystem. As the first decade of the twenty first century was ending, the governments of Australia and New Zealand committed to the construction of high-speed, fibre-optics next-generation access networks. This paper is about the approach followed by Australia and New Zealand to developing broadband infrastructure, the means deployed to build the network, and policy and market issues. The paper critically analyses the short history of each experience, including the political process, the reasons exhibited to justify the governments' involvement in infrastructure deployment, and the institutional arrangements introduced to manage the participation of private partners. The paper proposes a framework for analysis and uses its elements to critically analyse policy and regulatory decisions affecting the deployment rate and goals set by Australian and New Zealand government for their respective fibre-based next-generation platforms. The framework is used to draw comparisons between the two country cases and in so doing allowing the appreciation of commonalities and differences in the development and expectations for the future of telecommunications markets in the region.     

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.     

Wireline deregulation: The Canadian experience

Changes in the state of telephony markets paved the way for significant regulatory and legislative reforms in the telecommunications sector in the 1990s. In Canada, the 1993 Telecommunications Act was enacted to promote the emergence of competitors in a market that had until then been dominated by regional monopolies. This paper examines the Canadian telecommunications regulatory framework and analyzes the regulatory privileges given to new entrants at the expense of former telecommunications monopolies. Such regulations, which were meant to induce competition, ended up hurting consumers and distorting the market process. This paper also shows how the Canadian government recently eliminated many of those regulations by seizing control of the policy agenda from the telecommunications regulator.     

Institutional environment and complementary assets: Business strategy in China’s 3G development

This paper develops a framework to assess the influences of institutions and markets on the business strategy of firms in transition economies. We argue that regulatory systems and markets in transition economies are interdependent. Their changing conditions will interact and influence the types of partnerships in new market entry. Using a case study approach based on historical data and interviews, we show how China’s telecommunications industry evolved between 1987 and 2007, and led to the development of a 3G (third generation mobile telecommunications) standard and networks. Our analysis based on the framework explains how regulative elements and market conditions shape the strategic choices of partnerships between domestic and foreign firms when entering China’s 3G market.     

Telecommunications and economic development – The 21st century: Making the evidence stronger

A review of the literature on the relation between telecommunications and economic development published since the turn of this century is undertaken. Two stages have been considered: until 2008, most contributions continued to examine the role of telecommunications taken together; since 2009, the impact of broadband –and, to a lesser extent, of mobile communications– dominates the research agenda. All in all, the role of telecommunications as a catalyst to leverage economic growth has been conclusively proven over the years. Taking into consideration the shortcomings of previous research, suggestions for future work are also provided.     

Private participation in government-led backbone network projects: Lessons from three Latin American experiments

This study presents an ex post comparative assessment of the relative performance of three Latin American broadband network emblematic projects implemented through public-private projects (PPP). Results show that the relative performance of these projects is extremely sensitive to differences in contractual design and regulatory approaches applied in each case. The detailed examination and comparative analysis of these experiences allowed us to extract important lessons in terms of design and implementation of PPP in telecommunications sector. In particular, our analysis finds that imperfect financing and demand risk allocations in projects can jeopardize their operational and financial sustainability. As well, the examination of these experiences allows us to conclude that in markets characterized by continuous economic and technological transformations, vertical separation restrictions imposed for reducing the risk of increasing market power and concentration may not be justified. As well, analysis shows that in such evolving contexts, a more flexible and adaptable regulatory approach is recommendable. Finally, our analysis reveals the role of complementary policies in the context of the implementation of countries’ digital strategies, as a means that contribute to ensure the accomplishment of broadband accessibility national targets.     

Different paths to universal access: The impact of policy and regulation on broadband diffusion in the developed and developing worlds

The authors examine the broadband digital divide by analyzing the impact of policy and regulation on broadband Internet diffusion. Their multiple regression analysis shows factors that determine broadband diffusion in technologically developed countries do not necessarily have the same impact in less developed countries. They show that in technologically developed countries, there is greater broadband diffusion in countries that make a higher financial investment in information and communication technologies (ICTs), have effective governing practices at the national level, have higher levels of education, and are more urban. In technologically developing nations, a competitive telecommunications sector and higher investment in ICTs lead to greater broadband diffusion, with investment having an even larger impact in the developing world than in the developed world. In addition, stronger democratic political institutions, higher levels of national income and lower levels of income inequality increase diffusion, but the presence of a national telecommunications regulatory authority has a negative impact. These results suggest that the path to widespread availability and use of broadband requires different strategies depending on a nation's level of technological development.     

Spectrum allocation and its relevance for competition

Spectrum is one of the most important production factors for mobile telecommunications operators. Spectrum policy is paramount as spectrum is a scarce resource allocated by regulatory authorities. Hence, when allocating spectrum and determining the potential use of spectrum, the regulatory authorities have a significant influence on the competitive situation in mobile markets.     

Regulation and transaction costs in telecommunications: A research agenda

Antitrust and regulatory policies influence the vertical and horizontal integration of firms and the characteristics of their contractual arrangements. This paper examines the relevance of transaction cost economics for the analysis of regulatory policy in telecommunications. It explores the impact of changes in national telecommunications regulation on the level of transaction costs. After building a new theoretical framework based upon previous transaction cost contributions, the paper sets out a research agenda concerning the importance of transaction costs for antitrust and regulatory policies.     

Ex ante regulation and co-investment in the transition to next generation access

Investments in next generation access networks (NGANs) ask for a new set of regulatory remedies. This paper contributes to this debate by focusing on three issues: the migration from the legacy copper network to the NGA infrastructure, and how wholesale pricing regulation might affect this process; the introduction of differentiated wholesale remedies according to geographical differences in NGAN deployment; the impact of co-investment decisions on market outcomes and their interplay with access regulation. Using the recent economic literature, arguments and possible guidelines are proposed, which might be useful to regulators and policy makers.     

Consumer behavior towards on-net/off-net price differentiation

This paper explores how consumers react towards price differentiation between on-net and off-net calls in mobile telecommunications - a pricing policy that is common in many mobile telecommunications markets. Based on a survey of 1044 students it is demonstrated that some consumers may suffer from a "price differentiation bias", i.e., a fair number of consumers may overestimate the savings that result from reduced on-net and/or off-net charges, as they do not appear to weigh the prices with the probabilities of placing off-net and on-net calls. This may help to explain why it have been the smaller operators in various countries who have introduced on-net/off-net price differentiation. The paper also discusses the implications that such a consumer bias may have for market competition.     

Fixed-to-mobile substitution in the European Union

This paper analyzes substitution between access to fixed-line and mobile telephony in the European Union using cross-section panel data on households’ choices of telecommunications technologies in years 2005–2010. We estimate a structural model of household?s demand for access to: (i) fixed-line only; (ii) mobile only; and (iii) both fixed-line and mobile. We find that growing Internet usage increases the share of ‘fixed + mobile’ households, which suggests that households keep their fixed-line connection to access Internet. However, the spread of 3G and cable broadband access decreases the share of ‘fixed + mobile’ households and increases the share of ‘mobile only’ households. Hence, fixed-to-mobile substitution was slowed down by the spread of Internet but it may continue with the spread of mobile broadband. Furthermore, bundling of telecommunications services increases the share of ‘fixed + mobile’ households and decreases the shares of ‘mobile only’ and ‘fixed only’ households. Therefore, operators which can bundle fixed-line connection with Internet or mobile services may slow down fixed-to-mobile substitution.     

Rural broadband: The provider matters

As broadband use has grown over the past few years, scholars and policymakers have turned some of their attention to the urban-rural broadband divide. While existing research offers important insights into this divide, no research has fully explored the differences in broadband deployment patterns among various types of telecommunications providers, including both large and small telephone and cable providers. Through data collected from interviews with telecommunications company representatives, this research assesses the extent to which different types of providers are deploying broadband in urban and rural areas. The interviews are also used to ascertain factors shaping the broadband deployment decision-making process for different types of providers. Both the quantitative and qualitative elements of this research demonstrate clear patterns among different types of providers in relation to rural broadband deployment, as different types of companies are influenced by somewhat unique regulations, competitiveness concerns, resource levels, and existing infrastructure conditions.     

Closing information asymmetries: A scale agnostic approach for exploring equity implications of broadband provision

A persistent challenge for telecommunications policy is the determination of broadband provision footprints in both space and time. In the United States, Form 477 data from the Federal Communications Commission (FCC) provide a valuable snapshot of broadband provision at the block level, but there are often inconsistencies with the underlying data. These inconsistencies include overly-optimistic self-reports from providers, requirements to report broadband provision within inflexible census administrative units, and a modest temporal reporting schedule (biannual) with a significant, one year temporal lag. These uncertainties are often compounded by telecommunications providers refusing to disclose any information on service footprints, geographic expansion plans or the characteristics of populations served by broadband. This type of obfuscation drastically limits the ability of policy analysts to evaluate outcomes (both positive and negative) associated with service provision and the digital divide, more generally. With the recent entry of Google Fiber to several metropolitan markets in the United States, many of the broadband reporting and evaluation challenges have re-emerged. The purpose of this paper is to leverage basic data mining techniques, a scale agnostic geographic framework and exploratory spatial data analysis (ESDA), to uncover the geographic intricacies of Google Fiber (Fiber) service for both Provo, Utah and Austin, Texas and compare them to Form 477 reports. In addition, we use basic statistical approaches to explore issues of broadband access and equity, accounting for the differences in socio-economic and demographic status of the populace served/not served for both cities, as well as basic pricing within and between communities.     

Global political economy of technology standardization: A case of the Korean mobile telecommunications market

This paper examines empirical cases of standardization in the Korean mobile market as vehicles for approaching the broader political and institutional context of standardization in telecommunications. A consideration of Korean standardization in the mobile telecommunications market is particularly interesting because it reveals how the state's political interests influence standards decisions, which are primarily driven by market and technological changes in telecommunications. Judged from the social construction of technology perspective which sheds light not only on technology itself but also on political, social and economic interests that surround transformations in technology, this paper highlights power relations among the major actors that have made technology standards decisions in Korea regarding second (2G) and third-generation (3G) mobile telephony. The paper also attempts to show how the Korean government has dealt with the diverse interests of various market actors while pursuing its own policy agenda.     

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.     

Reaching out to remote and rural areas: Mobile satellite services and the role of Inmarsat

This paper analyses the problems faced by developing countries in extending telecommunications to remote and rural areas. It identifies some possible technical solutions using mobile satellite services, especially in specialized niche markets, but also ways in which telecommunications can be made more widely available to populations in rural and remote areas. Although means must be found to finance such development, the paper highlights the necessity of implementing policy and regulatory frameworks conducive to the availability of mobile satellite services.     

Accounting for ARPU: New evidence from international panel data

Average revenue per user (ARPU) is commonly used by regulators and industry observers to compare the performance of mobile telephony markets. Under the new EU electronic communications regulatory framework, some national regulatory authorities (NRAs) have linked higher ARPU with ‘significant market power’. This paper empirically examines the determinants of ARPU in a systematic way, taking account of service quality, market environment, regulation and quantity of service. The robust results suggest that concentration may not be a reliable indicator of competition in mobile markets; there are economies of density in mobile markets; and higher GDP per capita increases ARPU.     

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.