Infrastructure Competition and Strategic Choice in the Transition to Next Generation Broadband Networks
23 Pages Posted: 31 Mar 2016 Last revised: 15 Aug 2016
Date Written: March 31, 2016
This paper investigates how competition among operators of broadband access networks has shaped their strategic choices about deploying advanced broadband technologies and increasing network capacity. Focusing on the experience with operators in U.S. and Canada, the paper provides a firm level analysis of a variety of financial, organizational, and marketing choices influencing the extent to which particular operators have responded to rapidly growing demand for network resources since the late 2000s. Incentives of dominant operators in Canada have been relatively stronger than their counterparts in the U.S. to increase the capacity of legacy copper and cable platforms, while some U.S. operators have had stronger incentives to deploy next generation fibre-to-the-premises (FTTP) networks. A high dividend payout financial strategy and increasing vertical integration reduce incentives to invest in new technologies, while creating the potential for overinvestment and inefficient duplication in legacy platforms. We assess the implications of the experience in U.S. and Canada with infrastructure competition in the context of broader international search for private and public sector strategies that enhance the pace of progress in the transition from sunset to next generation broadband networks.
Keywords: Broadband, innovation, creative destruction, strategy, technological change
JEL Classification: K2, O3, L13, L86
Suggested Citation: Suggested Citation