Lopsided effects of telecom reforms on mobile markets in the enlarged EU: Evidence from dynamic quantile model

The European Union (EU) has recently been significantly enlarged with addition of ten countries, almost all from Central and Eastern Europe (CEE). This was expected to enhance the performance of the mobile telecommunications industry in the accession countries and in turn to consolidate the highly fragmented European mobile telecoms market to finally reach the single market goal. However, the significant differences between mobile telecommunication performances from one country to another in the enlarged European area raise the issue of how optimal and durable the EU-level reforms have been. We use dynamic quantile regression methods to estimate the effects of mobile telecommunication reforms on the providers' performance in the EU enlargement context. This approach allows uncovering potential asymmetric effects of telecom reforms policy by letting the parameters of regressions vary across the conditional distribution of the sector's performance indicators. Using annual data from on 32 European countries from 1993 to 2011, we document asymmetrical responses to the reforms depending on the conditioning quantile at which they are calculated. Our results show that the effects of the generic and imposed European reforms are notably beneficial and larger for players in developed European countries characterized initially by real and higher degree of the reforms implementation. Accordingly, the success and durability of European reforms, especially in the new CEE member states, which often fail to comply with the pace of the reforms' adoption of industrialized European countries, is not guaranteed when countries specifications are not sufficiently taken into account. A final appealing result regarding the regress of the reform-performance relationship in the mobile markets after enlargement even for western countries attract attention on revising the Europe's current approach to telecoms regulation.