The need for a new approach to regulating fixed networks |
| |
Authors: | Wolfgang Briglauer Ingo Vogelsang |
| |
Affiliation: | a Research Institute for Regulatory Economics, Vienna University of Economics and Business, Heiligenstädter Straße 46-48, 1190 Vienna, Austria b Department of Economics, Boston University, 270 Bay State Road, Boston, MA 02215, USA |
| |
Abstract: | The increasing danger of excess capacity in the regulated fixed networks calls into question the established long-standing pricing standards for wholesale services based on forward-looking long-run incremental costs (FL-LRAIC). Within the EU “Regulatory Framework for Electronic Communications and Services”, the FL-LRAIC standard has worked quite well in expanding markets, although even there price-squeeze problems have appeared. In contracting markets the price-squeeze issue, however, becomes paramount and lower prices both at the wholesale and retail levels would be efficient. Because both expansion and contraction could be relevant in the future, this paper suggests an optional approach based on the wholesale price formula p=min{FL-LRAIC, Retail-Minus} with an optional replacement of per-minute charges by capacity-based access charges (CBC). This will generally protect alternative competitors against price-squeeze while at the same time allowing the fixed-network incumbent full downward price flexibility. It also protects alternative competitors and end users against excessively high prices. |
| |
Keywords: | Fixed-network regulation Capacity-based charges Excess capacity Fixed-to-mobile substitution Retail minus |
本文献已被 ScienceDirect 等数据库收录! |
|