Speeding Up the Internet: Regulation and Investment in European Fiber Optic Infrastructure

47 Pages Posted: 3 May 2017 Last revised: 9 Mar 2018

See all articles by Wolfgang Briglauer

Wolfgang Briglauer

WU Vienna

Carlo Cambini

Politecnico di Torino & EUI - Florence School of Regulation; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Michal Grajek

ESMT European School of Management and Technology

Multiple version iconThere are 2 versions of this paper

Date Written: May 3, 2017

Abstract

In this paper we study how the coexistence of access regulations for legacy (copper) and fiber networks shapes the incentives to invest in network infrastructure. To this end, we develop a theoretical model explaining investment incentives by incumbent telecom operators and heterogeneous entrants and test its main predictions using panel data from 27 EU member states over the last decade. Our theoretical model extends the existing literature by, among other things, allowing for heterogeneous entrants in internet access markets, as we consider both other telecom and cable TV operators as entrants. In the empirical part, we use a novel data set including information on physical fiber network investments, legacy network access regulation and recently imposed fiber access regulations. Our main finding is that more stringent access regulations for both the legacy and the fiber networks harm investments by incumbent telecom operators, but, in line with our theoretical model, do not affect cable TV operators.

Keywords: Internet access market, access regulation, investment, infrastructure, next generation networks, broadband, telecoms, cable operators and Europe

JEL Classification: L96, L51

Suggested Citation

Briglauer, Wolfgang and Cambini, Carlo and Grajek, Michal, Speeding Up the Internet: Regulation and Investment in European Fiber Optic Infrastructure (May 3, 2017). ESMT Working Paper 17-02. Available at SSRN: https://ssrn.com/abstract=2962532 or http://dx.doi.org/10.2139/ssrn.2962532

Wolfgang Briglauer

WU Vienna ( email )

Welthandelsplatz 1 1
Wien, 1020
Austria

Carlo Cambini

Politecnico di Torino & EUI - Florence School of Regulation ( email )

Corso Duca degli Abruzzi, 24
Torino, Torino 10129
Italy
+390115647292 (Phone)
+390115647299 (Fax)

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Michal Grajek (Contact Author)

ESMT European School of Management and Technology ( email )

Schlossplatz 1
Berlin, 10178
Germany

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