Ownership Structure of Cable Networks and Competition in Local Access

In this paper, we discuss the role of cable television networks and their ownership structure in promoting competition in the local access market. First, we show that the dual ownership of a local telephone network and a cable network, compared with separate ownership, may increase or decrease incentives to invest in upgrading the cable television network. Second, we argue that separate ownership of the two networks is important to promote competition in local access.Cable Networks, Local Access, Competition

Deregulating Telecommunications in Internet Time

The Telecommunications Act of 1996 has yielded more litigation and less local competition than its supporters expected or intended. Calls for its reform are multiplying. In this Article, Professor Septa diagnoses the 1996 Act\u27s failings and prescribes a framework for reform. The successful deregulations of the transportation industries and of long-distance telecommunications (precedents the 1996 Act sought to follow) demonstrate that the Act should have taken additional steps to promote intermodal telecommunications competition. Transportation deregulation successfully prompted competition where (as in the case of airlines and trucking) multiple firms could compete on an intramodal basis or where (as in the case of railroads) the single firm was subject to intermodal competition from firms using other technologies. The 1996 Act\u27s reliance on the unbundling of incumbent local telephone companies\u27 networks reveals that its supporters thought that portions of the local wireline networks would remain bottlenecks. The lesson, therefore, is that the 1996 Act should have taken additional steps to create the conditions for intermodal competition. Based on this analysis, Professor Septa outlines a new communications law that increases the possibilities for intermodal competition. Indeed, the glimmers of hope for local competition-cell phone substitution and voiceover- Internet-protocol (VoIP) telephony-are intermodal competitors. Although the 1996 Act did move in this direction and the Federal Communications Commission is vigorous on several fronts, more can be done. Spectrum reform (the most significant missed opportunity in the 1996 Act) and other steps would decrease legal and economic barriers to intermodal competition. The Article also addresses local and state control of telecommunications carriers, regulatory parity, universal service reform, and government funding of research and infrastructure, and it offers a technology-neutral regulatory scheme for VoIP. The proposed deregulatory agenda seeks a law capable of accommodating the speed and diversity of technological change in this Internet time

Margin Squeeze in Fixed-Network Telephony Markets – competitive or anticompetitive?

This paper looks at the effects of different forms of wholesale and retail regulation on retail competition in fixed network telephony markets. We explicitly model two asymmetries between the incumbent operator and the entrant: (i) While the incumbent has zero marginal costs, the entrant has the wholesale access charge as (positive) marginal costs; (ii) While the incumbent is setting a two-part tariff at the retail level (fixed fee and calls price), the entrant can only set a linear price for calls. Competition from other infrastructures such as mobile telephony or cable is modelled as an ‘outside opportunity’ for consumers. We find that a horizontally differentiated entrant with market power may be subject to a margin squeeze due to double marginalization but will never be completely foreclosed. Entrants without market power might be subject to a margin squeeze if the wholesale access price is set at average costs and competitive pressure from other infrastructures increases. We argue that a wholesale price regulation at average costs is not optimal in such a situation and discuss retail minus and deregulation as potential alternatives.access regulation, foreclosure, margin squeeze, telecommunications, fixed networks

Infrastructure-Based Versus Service-Based : Competition In Telecommunications

Unbundling of the local loop (ULL) has seen quite different "success stories" in the various countries across Europe. Although the obligation for the provision of ULL was implemented in the regulatory framework early and mostly parallel to other means of liberalisation, national implementation has been rather heterogeneous. One question of decisive importance for national regulatory authorities (NRAs) was whether to foster service-based competition in the first phase of liberalisation or to focus on infrastructurebased competition. The different NRAs chose to head down different roads. This paper analyses whether the strategy of NRAs has had any mid-term effect on the economic welfare created in the communications markets. It indicates that infrastructure-based competition has a positive effect on innovation. Moreover, infrastructure-based competition appears to be more important for business customers than for residential clients. On the other hand, service-based competition lowers call prices and appears to be more important to residential markets. The results of this study point out the importance of a balanced approach to both types of policies.competition; telecommunication; ladder of infrastructure; ladder of investement; regulatory policies

Postal Markets and Electronic Substitution: Implications for Regulatory Practices and Institutions in Europe

There is an increasing convergence between postal products and telecom applications which suggests the need for a co-evolution of regulation. But there is hardly any discussion in academia or in practice about the consequences for regulation. Relevant questions are: Which parts of current regulation will become redundant? Is there additional regulation needed due to new bottlenecks or changes in consumer behavior? In our qualitative analysis, we investigate the implications of intermodal competition and growing convergence between postal and telecommunications services on regulatory institutions and regimes. We set up a comparison between the networks and compare the scope of universal services and issues concerning market power regulation in the two different industries.Convergence, Regulation, Post, Telecommunication, Universal service obligation, Access

Deregulating Telecommunications in Internet Time

The Telecommunications Act of 1996 has yielded more litigation and less local competition than its supporters expected or intended. Calls for its reform are multiplying. In this Article, Professor Septa diagnoses the 1996 Act\u27s failings and prescribes a framework for reform. The successful deregulations of the transportation industries and of long-distance telecommunications (precedents the 1996 Act sought to follow) demonstrate that the Act should have taken additional steps to promote intermodal telecommunications competition. Transportation deregulation successfully prompted competition where (as in the case of airlines and trucking) multiple firms could compete on an intramodal basis or where (as in the case of railroads) the single firm was subject to intermodal competition from firms using other technologies. The 1996 Act\u27s reliance on the unbundling of incumbent local telephone companies\u27 networks reveals that its supporters thought that portions of the local wireline networks would remain bottlenecks. The lesson, therefore, is that the 1996 Act should have taken additional steps to create the conditions for intermodal competition. Based on this analysis, Professor Septa outlines a new communications law that increases the possibilities for intermodal competition. Indeed, the glimmers of hope for local competition-cell phone substitution and voiceover- Internet-protocol (VoIP) telephony-are intermodal competitors. Although the 1996 Act did move in this direction and the Federal Communications Commission is vigorous on several fronts, more can be done. Spectrum reform (the most significant missed opportunity in the 1996 Act) and other steps would decrease legal and economic barriers to intermodal competition. The Article also addresses local and state control of telecommunications carriers, regulatory parity, universal service reform, and government funding of research and infrastructure, and it offers a technology-neutral regulatory scheme for VoIP. The proposed deregulatory agenda seeks a law capable of accommodating the speed and diversity of technological change in this Internet time

Competition After Unbundling: Entry, Industry Structure, and Convergence

In the last few years, U.S. telecoms policy has shifted from encouraging the sharing of existing networks to facilitating the deployment of advanced communications networks. Given the large capital expenditures required for these networks, there can be only a few of such networks. In light of the natural forces that limit the number of facilities-based suppliers, it is vital for policymakers to investigate and implement rules that make markets more conducive to facilities-based entry and eliminate any existing rules that discourage deployment. The purpose of this Article is to provide a simple conceptual framework to evaluate the effect of particular rules and regulation on the construction of advanced communications networks and the expansion of existing networks into new markets. We provide numerical examples and a number of applications to illustrate how the conceptual framework implicates particular rules and regulations as to their effect on facilities-based entry. Applications include an analysis of convergence, regulated limitations on service offerings, the pernicious effects of cable franchising, and the potential for collusion

The Timing of Broadband Provision: The Role of Competition and Demographics

We examine the supply of DSL broadband by the incumbent local exchange company (LEC) in five U.S. states in the earlier years of deployment. Our empirical analysis shows that income, other demographics, and cost factors are important determinants of entry and availability, and thus, the supply side of the digital divide. After controlling for other factors, the racial characteristics of the area do not affect DSL provision. Demand-side factors explain possible redlining in the region studied, and there is no need for policies aimed at overcoming discrimination on the part of the provider. Our objective in gauging the importance of the various factors is to highlight the important drivers of broadband provision for policy makers. We conclude that policies to accelerate the narrowing of the broadband digital divide must either focus on the demand side of the market or increase the firms' profitability of entering less desirable areas.