Procompetitive infrastructure sector regulation and diffusion of innovation: The case of broadband networks

The paper assesses the scope for competition inducing infrastructure regulation in furthering the diffusion of innovation. The paper uses data on the adoption of broadband services comprising a global panel of 167 countries. The effects of different regulatory provisions are assessed. The result of this paper allows qualifying different elements of the regulatory debate on the consequences of access requirements, including mandatory unbundling. First, it suggests that interplatform competition is generally not leading to acceleration in broadband diffusion. Second, with respect to intra-platform competition, this has been analyzed at two different levels: full unbundling and retail competition. In the first case the competitor is investing in network infrastructure to be able to induce some degree of service differentiation. With retail competition the scope for service differentiation is much more limited and hence competition is most likely centered on price. While both lead to faster diffusion, the results consistently show that the effect from retail competition is proportionally about twice as strong compared to unbundling. Moreover, the analysis of the time profile of the effects show that this impact on diffusion first increases until the third or fourth year after introduction, but then dissipates away. Also here one can argue that retail differentiation leads to more intense price competition and therefore faster diffusion. Different robustness checks for the results are provided. --Broadband,regulation,innovation,service competition,platform competition,local loop unbundling

Tower companies vs mergers in mobile networks

Tower companies own almost three quarters of the mobile telecom installations globally and continue to grow. The main driver of this change is linked to the reduction of capital expenditures by operators and the increasing sharing of infrastructure by tower companies that improves their assets’ tenancy ratios. In this paper we review the evidence from tower company introductions in European markets and compare the operator financial outcomes along with the cost of services and market concentration that consumers experience. We also compare the wave of mergers during the same period in Europe, as an alternative cost-saving approach. We find that mergers primarily help operators improve their financial positions and EBITDA margin by 8.6 percentage points while consumers face significantly more concentrated markets with fewer options. Tower companies reduce average revenues per user by 1.41- 1.79 Euros as increased tenancy ratios are passed-through to consumers and help operators reduce their capital expenditures. We provide policy and market recommendations based on these findings

Auction design and auction outcomes

We study the impact of spectrum auction design on the prices paid by telecommunications operators for two decades across 85 countries. Our empirical strategy combines information about competition in the local market, the level of adoption and a wide range of socio-economic indicators and process specific variables. Using a micro dataset of almost every mobile spectrum auction performed so far—both regional and national—we show that auction design affects final prices paid. Two designs (SMRA with augmented switching and CCA with core pricing) result in auctions with systematically higher normalized returns. Further, we document that spectrum ownership appears to affect prices paid in subsequent auctions. We discuss the mechanisms of cost minimization and foreclosure faced by operators in different regulatory environments. Our findings have implications for policy-makers and regulators

European multi regional input output data for 2008–2018

Regioindustry trade flow data are useful inputs for economists and policy makers for a range of planning and disaster-response applications. Within the European Union (EU) whose members enjoy free trade, small variations in these granular trade flows can often propagate to other member-countries far beyond the original trade-shock. In spite of their importance, this information is either outdated or non-existent in the EU as the official databases only provide data at the national-sectoral or regional-only (non-industry specific) level. To fill this gap, we construct Multi-Regional Input-Output (MRIO) tables for 272 European NUTS-2 regions for the period 2008-2018, building on freight transport data as their main trade route across them. The database covers 10 sectors for industry, services and agriculture. We successfully validate our estimates through a direct comparison with a previous MRIO dataset for European regions (REGIO), a sub-sample of countries reporting regional trade flow data as the "ground truth" and a sensitivity analysis reporting relative standard errors well below the MRIO literature average

The impact of maximum markup regulation on prices

Markup regulation is a common yet understudied type of regulation. We analyze the repeal of maximum wholesale and retail markup regulation in an oligopolistic and vertically non-integrated market. By comparing the prices of products affected by regulation before and after the policy change and using unregulated products as a control group, we find that abolishing regulation led to a significant decrease in both retail and wholesale prices. The results provide indirect but consistent evidence that markup ceilings provided a focal point for collusion among wholesalers

To share or not to share? The impact of mobile network sharing for consumers and operators

This paper assesses the impact of mobile network sharing in Europe during the 2000-2019 period, looking at 140 mobile operators in 29 countries. We find that - consistent with economic theory - network sharing generated significant benefits for operators and consumers, including lower prices and improved network coverage and quality. This was driven by cost reductions, higher returns on investment and increased competition. These effects materialized heterogeneously, with the impact of network sharing depending on the type of sharing, the technology cycle in which it is entered into as well as the market position and size of the operators entering the agreement. This has important implications going forward as it shows that network sharing can play a vital role in the deployment of new 5G networks and that the technological and market specificity of each type of sharing agreement can significantly affect its outcomes

Does automation erode governments' tax basis? An empirical assessment of tax revenues in Europe

Decomposing taxes by source (labor, capital, sales), we analyze the impact of automation (1) on tax revenues, (2) the structure of taxation, and (3) identify channels of impact in 19 EU countries during 1995-2016. Robots and Information and Communication Technologies (ICT) are different technologies designed to automate manual (robots) or cognitive tasks (ICT). Until 2007, robot diffusion led to decreasing factor and tax income, and a shift from taxes on capital to goods. ICTs changed the structure of taxation from capital to labor. We find decreasing employment, but increasing wages and labor income. After 2008, robots have no effect but we find an ICT-induced increase in capital income, a rise of services, but no effect on taxation. Automation goes through different phases with different economic impacts which affect the amount and structure of taxes. Whether automation erodes taxation depends (a) on the technology type, (b) the stage of diffusion and (c) local conditions

Speed 2.0. Evaluating access to universal digital highways

This paper shows that having access to a fast Internet connection is an important determinant of capitalization effects in property markets. We combine microdata on property prices in England between 1995 and 2010 with local availability of Internet broadband connections. Rich variation in Internet speed over space and time allows us to estimate the causal effect of broadband speed on property prices. We find a significantly positive effect, but diminishing returns to speed. Our results imply that an upgrade from narrowband to a high-speed first generation broadband connection (offering Internet speed up to 8 Mbit/s) could increase the price of an average property by as much as 2.8. A further increase to a faster connection (offering speeds up to 24 Mbit/s) leads to an incremental price effect of an additional 1. We decompose this effect by income and urbanization, finding considerable heterogeneity. These estimates are used to evaluate proposed plans to deliver fast broadband universally. We find that increasing speed and connecting unserved households passes a cost-benefit test in urban and some suburban areas, while the case for universal delivery in rural areas is not as strong

Speed 2.0. Evaluating access to universal digital highways

This paper shows that having access to a fast Internet connection is an important determinant of capitalization effects in property markets. We combine microdata on property prices in England between 1995 and 2010 with local availability of Internet broadband connections. Rich variation in Internet speed over space and time allows us to estimate the causal effect of broadband speed on property prices. We find a significantly positive effect, but diminishing returns to speed. Our results imply that an upgrade from narrowband to a high-speed first generation broadband connection (offering Internet speed up to 8 Mbit/s) could increase the price of an average property by as much as 2.8. A further increase to a faster connection (offering speeds up to 24 Mbit/s) leads to an incremental price effect of an additional 1. We decompose this effect by income and urbanization, finding considerable heterogeneity. These estimates are used to evaluate proposed plans to deliver fast broadband universally. We find that increasing speed and connecting unserved households passes a cost-benefit test in urban and some suburban areas, while the case for universal delivery in rural areas is not as strong