The impact of license duration on tangible investments of mobile operators

Using data from the WCIS (World Cellular Information Service) and the Telecoms Market Matrix of Analysis Mason, we were able to build a database relating the level of investment per capita to license duration for 14 countries over a 10-year period. An empirical analysis of the data shows a positive correlation between the tangible investment per capita and the license duration (the average of all active licenses or the latest license). More precisely, we observe an increase of €1.5 in the average investment per capita per year for each additional year of license duration. We also find no significant negative impact of license duration on mobile market competition. The competition outcomes are measured using the Lerner index at the operator level. Some robustness checks are performed at the country level by using the HHI (Herfindahl-Hirschman index) and the number of active mobile operators as measures of the level of competition, and we obtain additional results indicating once more that the competition is not negatively impacted by license duration.     

Optimal reciprocal access pricing and collusion

This work extends the network competition model of Armstrong [(1998). Network interconnection in telecommunications. Economic Journal, 108, 545–564] and Laffont, Rey, and Tirole (1998). Network competition: I. Overview and nondiscriminatory pricing. RAND Journal of Economics, 29, 1–37] by assuming that operators can maintain a certain level of collusion in the unregulated retail market, and access prices may be regulated through non-linear tariffs. It emerges that, in the case of partially collusive environments, the regulator can design cost-based non-linear access charges such that the result is socially optimal.     

Termination fees revisited

We reconsider the question of the optimal level of termination fees between communication networks in the context of heterogeneous usage and elastic participation. The interaction between these two features yields new insights; in our model: i) The profit maximizing reciprocal termination fee is above marginal cost; ii) the welfare maximizing termination fee is also above cost; iii) the welfare-maximizing termination fee is below the profit-maximizing one in the absence of termination-based price discrimination, but can be above it otherwise.     

The impact on broadband access to the Internet of the dual ownership of telephone and cable networks

In Portugal, until recently, the telecommunications incumbent offered broadband access to the Internet, both through digital subscriber line and cable modem. We estimate the impact on broadband access to the Internet of the structural separation of these two businesses. Using a panel of consumer level data and a random effects mixed logit model, we estimate the price elasticities of demand and the marginal costs of broadband access to the Internet. Based on these estimates, we simulate the effect of structural separation on prices and social welfare. Our estimates indicate that structural separation would cause a substantial welfare increase. These results raise questions about the policy of some countries of allowing the dual ownership of telephone and cable networks.     

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.     

Predation and network based price discrimination in Chile

This paper uses a model of strategic interaction among firms –that set discriminatory and nonlinear prices– in addition to public information on prices of the plans marketed by the three major mobile phone companies, to assess the extent to which on-net/off-net price differentials in the plans they offered could represent predatory practices in the mobile telephony market in Chile. The results show that the largest companies offered a few plans with an off-net/on-net price differential larger than what a competitive theoretical model predicts. This larger differential is consistent with the notion of predation defined by Hoernig (2007) as reducing a competitor's profits. Despite the fact that these plans were a small fraction of all the plans mobile phone firms offered, they were recently banned by the antitrust authority because of their potential anticompetitive effects.     

The role of online platforms for media markets — Two-dimensional spatial competition in a two-sided market

We analyze the market for online and offline media in a model of two-dimensional spatial competition where media outlets sell content and advertising space. Consumer preferences are distributed along the style and type of news coverage where the distance costs may vary across dimensions. For integrated provision of online and offline platforms we show that entering the online market reduces average profits and may even constitute a prisoner's dilemma. Specialized provision may yield polarization in the style and type dimensions. This is in contrast to the maximum–minimum differentiation result previously established in the literature on multidimensional horizontal competition. We show that maximal differentiation in both dimensions occurs due to the discrete nature of the type dimension and asymmetric advertising markets.     

Regulatory inertia versus ICT dynamics: The case of product innovations

This article conjectures that the legacy industry-specific regulation that has governed the telecommunications sector for a long time is in basic conflict with the dynamics and product innovations that characterize the modern information and communications technology (ICT) sector. Reasons for the failure of legacy regulation to promote product innovations are explained and proposals for alternatives, such as deregulation and regulatory reform are discussed. Both regulation and competition policy are more difficult for ICT than for other sectors. Therefore both, regulation and competition policy may need reforms in order to deal with new problems. The most drastic and most realistic alternative to legacy-type regulation remains deregulation and a move to competition policy. Symmetric regulation, smart regulation, quasi-Coasean approaches and subsidies all have some limited applicability to specific situations, but are all associated with complications that have to be resolved, while competition policy is a comprehensive alternative. Last-mile access and gatekeeper access are analyzed as two main areas of legacy regulation, which are in danger of being exported to other ICT areas. Such exports may negatively affect the dynamics of the ICT industry. Rather than being exported, legacy regulations should be reduced in order to enhance product innovations.     

Toward new guardrails for the information society

Increasing interdependencies and deepening uncertainty change how the information society can be governed sustainably. In response, policy approaches worldwide are being reconsidered and new approaches developed that are more appropriate to these conditions. This article explores the conditions under which policies that worked in the past remain appropriate and when they will likely fail. It explores the role of dynamic analytical frames and a reconsideration of the normative principles of information society policies in overcoming these weaknesses. New instruments and policy arrangements that are considered include the establishment of boundary conditions (“guardrails”) for players, reliance on adaptive forms of policy, and reliance on ethics across all layers of governance. Driven by the global heterogeneity of values and the diversity of historical, economic, political, and cultural conditions, national and global governance arrangements will likely become more multi-centric. To avoid regulatory drift and fragmentation, policy must strive to create dynamic learning systems that help to continuously improve information society governance.