Unbundling the Incumbent and Entry Into Fiber: Evidence From France

48 Pages Posted: 9 Jul 2018

Date Written: January 24, 2018

Abstract

We use panel data on 36,104 municipalities in metropolitan France over the period 2010-2014 to estimate two models of entry into local markets by: (i) alternative operators using wholesale access to the legacy copper network via local loop unbundling (LLU), and (ii) the incumbent and two alternative operators using the fiber technology. We find that a higher number of LLU competitors, and hence a less concentrated local market, has a positive impact on entry by fiber operators. Moreover, the presence of upgraded cable network in the local municipality stimulates fiber deployment. However, firms may choose to upgrade copper lines instead of investing in fiber networks. We use the estimates to calculate entry thresholds into local markets, which are substantially lower for broadband provision via LLU than via fiber and decrease over time. Fiber deployment becomes cheaper over time, but according to our estimates it will remain unprofitable for the vast majority of municipalities in France within the next years.

Keywords: fiber broadband, local loop unbundling, market entry

JEL Classification: K23, L13, L51, L96

Suggested Citation

Bourreau, Marc and Grzybowski, Lukasz and Hasbi, Maude, Unbundling the Incumbent and Entry Into Fiber: Evidence From France (January 24, 2018). CESifo Working Paper Series No. 7006, Available at SSRN: https://ssrn.com/abstract=3198479

Marc Bourreau

Telecom ParisTech ( email )

46, rue Barrault
Paris Cedex 13, F-75634
France

Lukasz Grzybowski (Contact Author)

Télécom Paris ( email )

19 Place Marguerite Perey
Palaiseau, 91120
France

Maude Hasbi

Télécom Paris ( email )

19 Place Marguerite Perey
Palaiseau, 91120
France

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