Incentives to Invest and to Give Access to Non-Regulated Next Generation Networks
32 Pages Posted: 28 Oct 2008
Date Written: October 1, 2008
Abstract
We analyze the incentives of a telecommunications incumbent to invest and give access to a downstream entrant to a next generation network, NGN. We model the industry as a duopoly, where a vertically integrated incumbent and a downstream entrant, that requires access to the incumbent's network, compete on Hotelling's line. The incumbent can invest in the deployment of a NGN that improves the quality of the retail services. Access to the old network is regulated, but access to the NGN is not. If the innovation is drastic, the incumbent always invests in the NGN, but does not give access to the entrant. If the innovation is non-drastic and if the access price to the old network is low, the incumbent voluntarily gives access to the NGN. If the innovation is non-drastic, there is no monotonic relation between the access price to the old network and the incumbent's incentives to invest. A regulatory moratorium emerges as socially optimal, if the innovation is large but non-drastic. We also analyze the case where both firms can invest in the deployment of a NGN.
Keywords: Next Generation Networks, Investment, Access, Regulation
JEL Classification: L43, L51, L96, L98
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
'Build or Buy' Strategies in the Local Loop
By Pinar Dogan and Marc Bourreau
-
Unbundling and Incumbent Investment in Quality Upgrades and Cost Reduction
By João Vareda
-
Access Regulation and Investment in Next Generation Networks: A Ranking of Regulatory Regimes
By Rainer Nitsche and Lars Wiethaus
-
By João Vareda and Steffen Hoernig
-
By João Vareda and Steffen Hoernig
-
Investment in Next Generation Networks and the Role of Regulation: A Real Option Approach
By Andrea Gavosto, Guido Giacomo Ponte, ...
-
NGA, IP-Interconnection and Their Impact on Business Models and Competition
By Wolfgang Reichl and Ernst-olav Ruhle
-
Role of Access Charges in the Migration from Copper to FTTH
By François Jeanjean and Julienne Liang
-
Ex-Ante Regulation and Co-Investment in the Transition to Next Generation Access
By Marc Bourreau, Carlo Cambini, ...