Access Regulation on NGA: A Financial Market-Led Solution to Bridge the Gap Between US and European Diverging Regulatory Approaches
Telecommunications Policy, 2010, 34, 287-298, DOI/10.1016/j.telpol.2009.12.004
Posted: 1 Nov 2018
Date Written: 2010
How to regulate wholesale access on next generation access (NGA) networks is probably the most pressing issue faced by European telecoms regulars today. The lack of actual competitive restraint from cable operators precludes the replication of US-like regulatory forbearance, as it might lead to the (re-) monopolization of broadband markets by telecoms incumbents, thus spoiling the celebrated achievements over the last decade, whereby competing operators have penetrated the market thanks to widespread access regulation over the DSL platform. However, as NGA networks are largely yet to be deployed, the threat of similar measures being extended is keeping incumbents from undertaking investments into NGA. This is particularly so given the perceived uncertainty about consumers’ willingness to pay for next-generation Internet access services, which raises deep reservations about the viability of the business case for NGA. Such a stalemate is exacerbated by the difficulty of envisaging practical solutions to reach a “new regulatory contract”, where conflicting interests are effectively balanced out for the benefit of the society overall. This article represents an attempt to address this vacuum. A “division of labor” between regulators and the market is proposed, in order to reflect distinctive capabilities in an incentive-compatible way. In particular, while regulators would be responsible for setting wholesale access terms, the market would be left to price the risk in NGA deployment through the functioning of a commodity option market.
Keywords: Next Generation Networks, Access Regulation, Option Markets, Auction, Regulatory Forbearance
JEL Classification: L43, L52, L96
Suggested Citation: Suggested Citation