Infrastructure vs. access competition in NGNs

With the introduction of NGNs, operators need to upgrade their access networks because in several cases, existing access networks can no longer meet increasing customer expectations. Evolving consumer expectations will require changes to the existing access network – next generation access. However, existing technologies faces some difficulties and are not ready for large-scale roll-out yet. For example, in the case of DSL technologies, the great majority of operators with copper networks are improving their networks, making investments to deploy fiber optics closer to customers and offering higher-speed access, which is required for new emerging services (reducing the distance between fiber and the users.). The entry of new competitors can be based on the resale of services from the incumbent, on building up their own infrastructures, on renting unbundled infrastructure from incumbents, or, on the combination of the above elements. Then, is important create the right incentive for operators to make an efficient build/buy choice and define the appropriate pricing principles

Regulation and Barriers to Trade in Telecommunications Services in the European Union

Recent advances in telecommunications, particularly using fibre technologies, permit many services based on data-processing to be performed anywhere in the world. They thus become tradable and subject to the laws of comparative advantage. A good example is data-processing within large multi-national corporations, the integrated performance of which can reduce cost and add considerable value. Whereas a single market for the provision of such services has arisen in the US, the equivalent single market in the European Union is impeded by absent or imperfect regulation conducted at the national level, which fails to create a level playing field between the country’s former telecommunications monopolist and foreign competitors and prevents the emergence of trade in services, at considerable potential cost to firms operating in the EU. The paper discusses how this problem can be resolved by improved regulatory practice and evaluates the prospects for institutional change, in the form of more centralised scrutiny of regulatory remedies, which would make this more achievable.

Use of a game theory model to simulate competition in next generation networks

With game theory, we want to understand the effects of the interaction between the different players defined in our business case - Next generation access networks (NGNs). In the proposed games, the profit (outcome) of each operator (player) will be dependent not only on their actions, but also on the actions of the other operators in the market. This paper analyzes the impact of the price (retail and wholesale) variations on several output results: players’ profit, consumer surplus, welfare, costs, service adoption, and so on. For that, two price-setting games are played. Players’ profits and Net Present Value (NPV) are used as the payoff for the players in the games analyzed. We assume that two competing Fiber to the home networks (incumbent operator and new entrant) are deployed in two different areas. For the game-theoretic model, we also propose an adoption model use in a way that reflects the competition between players and that the variation of the services prices of one player has an influence on the market share of all players. In our model we also use the Nash equilibrium to find equilibrium - Proposed tools include a module to search the Nash equilibrium in the game.info:eu-repo/semantics/publishedVersio

Broadband access and digital divide

It is recognized that there is a disparity between broadband availability in urban and rural areas. The pre-existing telecommunications infrastructure is generally poor and unevenly distributed in favor of urban centers. In most rural areas, low population density and high deployment costs discourage private investments, creating a negative feedback of limited capacity, high prices, and low service demand. Building telecommunications networks in rural areas is costly. Further, in many cases, there is not a good commercial business case for rural deployments. Whereas established and competitive service providers already offer solutions for urban and suburban areas, there is little or no commitment to connect areas that include smaller towns and rural villages. The deployment of access network broadband services on low-competition areas is characterized by low subscriber densities, longer loop lengths, lower duct availability, and consequently higher infrastructure cost compared to high-competition areas.info:eu-repo/semantics/publishedVersio

Simulation of competition in NGNs with a game theory model

Like in a real competitive market situation, Next Generation Networks (NGN) competitors need to adapt their strategy to face/react the strategies from other players. To better understand the effects of interaction between different players, we build a Game Theory model, in which the profit of each operator will be dependent not only on their actions, but also on the actions of the other operators in the market. This paper analyzes the impact of the price (retail and wholesale) variations on several output results: players’ profit, consumer surplus, welfare, costs and service adoption. We assume that two competing FTTH networks (incumbent operator and new entrant) are deployed in two different areas. We also propose an adoption model use in a way that reflects the competition between players and that the variation of the services prices of one player has an influence on the market share of all players. Finally, model use the Nash equilibrium to find the best strategies.info:eu-repo/semantics/publishedVersio

The new economy: essays in network economics and two-sided markets

Following the Introduction, which surveys existing literature on the technology advances and regulation in telecommunications and on two-sided markets, we address specific issues on the industries of the New Economy, featured by the existence of network effects. We seek to explore how each one of these industries work, identify potential market failures and find new solutions at the economic regulation level promoting social welfare. In Chapter 1 we analyze a regulatory issue on access prices and investments in the telecommunications market. The existing literature on access prices and investment has pointed out that networks underinvest under a regime of mandatory access provision with a fixed access price per end-user. We propose a new access pricing rule, the indexation approach, i.e., the access price, per end-user, that network i pays to network j is function of the investment levels set by both networks. We show that the indexation can enhance economic efficiency beyond what is achieved with a fixed access price. In particular, access price indexation can simultaneously induce lower retail prices and higher investment and social welfare as compared to a fixed access pricing or a regulatory holidays regime. Furthermore, we provide sufficient conditions under which the indexation can implement the socially optimal investment or the Ramsey solution, which would be impossible to obtain under fixed access pricing. Our results contradict the notion that investment efficiency must be sacrificed for gains in pricing efficiency. In Chapter 2 we investigate the effect of regulations that limit advertising airtime on advertising quality and on social welfare. We show, first, that advertising time regulation may reduce the average quality of advertising broadcast on TV networks. Second, an advertising cap may reduce media platforms and firms' profits, while the net effect on viewers (subscribers) welfare is ambiguous because the ad quality reduction resulting from a regulatory cap o¤sets the subscribers direct gain from watching fewer ads. We find that if subscribers are sufficiently sensitive to ad quality, i.e., the ad quality reduction outweighs the direct effect of the cap, a cap may reduce social welfare. The welfare results suggest that a regulatory authority that is trying to increase welfare via regulation of the volume of advertising on TV might necessitate to also regulate advertising quality or, if regulating quality proves impractical, take the effect of advertising quality into consideration. 3 In Chapter 3 we investigate the rules that govern Electronic Payment Networks (EPNs). In EPNs the No-Surcharge Rule (NSR) requires that merchants charge at most the same amount for a payment card transaction as for cash. In this chapter, we analyze a three- party model (consumers, merchants, and a proprietary EPN) with endogenous transaction volumes and heterogenous merchants' transactional benefits of accepting cards to assess the welfare impacts of the NSR. We show that, if merchants are local monopolists and the network externalities from merchants to cardholders are sufficiently strong, with the exception of the EPN, all agents will be worse o¤ with the NSR, and therefore the NSR is socially undesirable. The positive role of the NSR in terms of improvement of retail price efficiency for cardholders is also highlighted

How to fill the digital gap? : the (limited) role of regulation

This paper provides evidence on the migration from an “old” technology to a “new” technology, taking into account the impact that regulatory interventions on the old one might have on the incentives to invest and adopt the new one. This analysis has been applied to a sample of EU27 countries using panel data from 2004 to 2014 on the adoption, coverage and take-up rate of ultra-fast broadband infrastructures, whose development is one of the flagship initiatives of the Europe 2020 programmes. Results show that a 1% increase in the regulated price to access the old technology increases the adoption and the investment on the new broadband technology by ~0.45% and ~0.47%. These effects are not homogeneous across countries and are weakened in Eastern European countries, where the existing old broadband infrastructures are less developed than in the rest of Europe. It has also been shown that the access price to old networks negatively affects the take-up rate of the new technology-based services, thus calling for the need of more specific and complementary demand side policy incentives to enhance service adoptio

International economic law and the digital divide : a new silk road?

PhDThe failure of the trade negotiations at Seattle, and the collapse of the negotiations at Doha have bought increased attention to the issue of development, aid, and the implementation of special and differential rights in favour of developing countries. This thesis looks to examine one aspect of the many issues facing developed and developing countries in the negotiations that lie ahead, specifically how international economic law can be used in the application of technological processes to help address the Digital Divide. At present, there is an emphasis on development and the needs of developing countries, and that such development needs to be sustainable. Research reviewed in Chapter 2 indicates that growing information technology levels leads to growth of GDP. Importantly the use of ICT‘s will foster growth in the trade of electronic goods and services (electronic intangibles). By making positive attempts to reduce the Digital Divide, DCs and LDCs will be in a better position to access the necessary ICTs required to help grow GDP and facilitate sustainable development. The thesis sets out various measures to help reduce the digital divide and founded in international economic law. Central to the thesis is a new Layering Theory that the Author argues will assist operators (both incumbents and Independent Service Providers) in the developing world to gain access to international backbone Internet networks at cost price, one of the main impediments to reducing the international digital divide. The Layering Theory sets out a procedure for accurately identifying the relevant market for providers of Next Generation Networks (NGNs) and services so that those operators who abuse their dominance by refusing to supply an interconnection service or access to a digital network can be compelled to interconnect their networks to those smaller domestic or third country Internet Service Providers (ISP) operators who require access. By gaining access/interconnection in this way, operators in DCs and LDCs will be in a much better position to take advantage of cheaper production costs to export electronic intangibles overseas. Also, the thesis sets out recommendations for reform of international telecommunications, new provisions on technology transfer to help DCs and LDCs access the ICTs needed to address the Digital Divide, including provisions on technology transfer found in the increasing take-up of bilateral and regional trade agreements—and if there is to be free trade in e-commerce—recommendations for reform of current WTO rules on the classification of electronic goods and services. However, the thesis also argues that the digital divide cannot be addressed without strengthening the human capital base in developing and least developed countries, and that this cannot happen without such states also giving greater effect to the enforcement of civil and political, and economic, social and cultural rights ―at home‖. The thesis asks whether it is possible to define a relationship in IEL between civil and political, and economic social and cultural rights as a collective for example in the form of the much debated and somewhat controversial Right to Development (the ―RTD‖ as defined in this thesis) on the one hand, with economic indicators, such Gross Domestic Product (GDP) and Foreign Direct Investment (FDI) on the other? And if so, how the RTD can be operationalise