Anchor Product Regulation - Retrospective and Prospective

Abstract

Communications networks are undergoing a transition from copper to fibre, from 2G and 3G to LTE and from switched to IP. Where ex ante regulation applies transition involves particular challenges and trade-offs that differ from those applying to relatively stable pre-existing infrastructure. The rationale and approach to ex ante regulation should therefore be re-assessed to take account of network transition - indeed the desire for transition - as a policy goal. Anchor product regulation, an approach whereby an ex ante price control is applied to the legacy network service or to a sub-set of services over a new network, was first proposed in 2007 as an intermediate approach between a full cost orientated price control and no price control; and with network transition in mind. In relation to copper-fibre transition anchor product regulation, alongside non-discrimination requirements for network access, has been adopted by Ofcom in 2010 and in the recommendation on non-discrimination and costing adopted in September 2013 by the European Commission. This paper explores the motivation for anchor product regulation, its origins and its prospects.

Keywords: Telecommunications, regulation, next generation access

JEL Classification: L43, L51, L86, L96