In Pursuit of Fairness? Infrastructure Investment in Digital Markets

19 Pages Posted: 30 Sep 2022

See all articles by Tobias Kretschmer

Tobias Kretschmer

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)

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Date Written: September 27, 2022

Abstract

Recent and ongoing investments into telecommunications infrastructure have facilitated the repeated waves of digitization, both in personal and professional life. I address the question of which actors should contribute to investment costs into telecoms infrastructure and how. One widely discussed proposal (made, for example, by ETNO, the European Telecom Network Operations’ Association) is to mandate a few select large firms that offer complementary applications and services through the telecom infrastructure to compensate infrastructure providers by way of a lump sum. I discuss and evaluate this proposal from the perspectives of incentives, risk sharing, fairness, and implementability. Given the undisputed positive external effects of infrastructure investments on different actors in the internet ecosystem, I outline two theoretical first-best solutions and argue that the current proposal from ETNO is far from realizing the potential benefits of these options.

Keywords: Telecommunicatons infrastructure, investment, OTTs

JEL Classification: L4, L86, L96

Suggested Citation

Kretschmer, Tobias, In Pursuit of Fairness? Infrastructure Investment in Digital Markets (September 27, 2022). Available at SSRN: https://ssrn.com/abstract=4230863 or http://dx.doi.org/10.2139/ssrn.4230863

Tobias Kretschmer (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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