Level of Access and Competition in Broadband Markets

In this paper, we consider an unregulated incumbent who owns a broadband infrastructure and decides on how much access to provide to a potential entrant. The level of access, i.e., the network elements that are shared in the provision of competing broadband services, not only determines the amount of investment the entrant needs to undertake to enter the market, but also the intensity of post-entry competition. We consider an access scheme that determines an access level and an associated two-part tariff. We show that the equilibrium level of access is higher when the sensitivity of product differentiation to the level of access is lower, and when the marginal investment cost is higher. We also show that the unregulated incumbent sets a suboptimally low (high) level of access if the degree of service differentiation is sufficiently high (low).

Cooperation in Product Development and Process R&D Between Competitors

In this paper, we first provide a simple framework for cooperation in product development between competitors. We put forward the tradeoff between the benefits obtained through development cost sharing and the cost of intensified competition due to reduced product differentiation, which implies that no cooperation can be an equilibrium outcome. We allow for firms to cooperate partially, i.e., to develop some product components jointly, but not necessarily all components. This enables us to study the factors that may have an effect on the degree of cooperation in product development, both in the presence and in the absence of process R&D. We also analyze the interaction between cooperation decisions on product development and process R&D. By considering a direct link between the two, we show that the degree of cooperation in product development may adversely affect the intensity of cooperation in process R&D

Level of Access and Competition in Broadband Markets

In this paper, we consider an unregulated incumbent who owns a broadband infrastructure and decides on how much access to provide to a potential entrant. The level of access, i.e., the network elements that are shared in the provision of competing broadband services, not only determines the amount of investment the entrant needs to undertake to enter the market, but also the intensity of post-entry competition. We consider an access scheme that determines an access level and an associated two-part tariff. We show that the equilibrium level of access is higher when the sensitivity of product differentiation to the level of access is lower, and when the marginal investment cost is higher. We also show that the unregulated incumbent sets a suboptimally low (high) level of access if the degree of service differentiation is sufficiently high (low)

Size of RJVs and Degree of Cooperation in Product Development

In this paper we provide a model of Research Joint Venture (RJV), and study the incentives of competing firms to cooperate in product development. Firms that participate in the RJV decide on the product components for joint development, i.e., they decide on how much to cooperate. We consider three cases: (i) an RJV with an exogenous size and an endogenous scope, (ii) an RJV with an endogenous size and an exogenous scope, and (iii) an RJV with an endogenous size and scope. Using numerical simulations we show that, on average, there is a negative relationship between the size and the scope of the RJV in both cases (i) and (ii). In case (iii), we find a positive relationship between the equilibrium size and the equilibrium scope of the RJV. Furthermore, both the equilibrium size and scope of the RJV are increasing with the industry size

A Critical Review of the “Ladder of Investment” Approach

The “ladder of investment” is a regulatory approach proposed by Cave (2006), which has been widely embraced by national regulatory authorities in the European telecommunications sector. The approach entails providing entrants, successively, with different levels of access—the “rungs” of the investment ladder, while inducing them to climb the ladder by setting an access charge that increases over time or by withdrawing access obligations after some pre-determined date (i.e., by setting sunset clauses). Proponents of the ladder of investment approach claim that such regulatory measures would make service-based entry and facility-based entry complements—albeit they have been traditionally viewed as substitutes—in promoting competition. The regulators, thus, have shown a strong interest in this approach. The paper provides a critical review of the ladder of investment approach by setting out its two underlying assumptions and discussing their validity with references to the related industrial organization literature

Concurrence par les services ou concurrence par les infrastructures dans les télécommunications ?

Dans les télécommunications, deux formes de concurrence existent : la concurrence par les services, lorsque les entrants s’appuient sur les infrastructures de l’opérateur historique pour fournir leurs services, et la concurrence par les infrastructures, lorsque les entrants déploient pour cela des « infrastructures en propre ». Dans cet article, nous soutenons que ces deux formes de concurrence représentent des stratégies substituables pour les entrants et donc aussi, pour l’opérateur historique. La réglementation d’une forme de concurrence doit tenir compte de son impact sur l’autre forme de concurrence. Nous développons nos arguments en nous basant sur nos travaux précédents, Bourreau et Doğan (2002a et 2002b), et les illustrons par les exemples des marchés de la téléphonie longue distance et des services hauts débits.In the telecommunications industry, there are two kinds of competition : service-based competition, wherein new entrance lease access to the incumbent’s facilities, and infrastructure-based competition, wherein new entrants deploy alternative infrastructures. To the extent that service-based and facility-based entry are perceived as substitute strategies by the entrants, regulatory policies that are aimed at each one of them may exhibit conflicts. We develop our arguments on te basis of our formal studies, Bourreau and Doğan (2002a and 2002b), and we provide two examples based on the long distance telephony and broadband services markets

Service-based vs. facility-based competition in local access networks

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“Build-or-Buy” Strategies in the Local Loop

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