Competition and Bell Company Investment in Telecommunications Plant: The Effects of Une-P
16 Pages Posted: 17 Feb 2004
Date Written: September 17, 2003
After a brief discussion on expected and actual investment behavior in the telecommunications industry after the 1996 Act, an econometric model is used to quantify the relationship between UNE-P competition and Bell Operating Company investments in telecommunications plant. Using publicly-available Federal Communications Commission data, a positive relationship between UNE-P competition and BOC average net investment is found. According to the model, each UNE-P access line increased BOC average net investment by $759 per year, or about 6.4% per year in the aggregate. While BOC net investment fell by about 7% in 2002, investment dollars were more heavily allocated to states with greater levels of UNE-P competition, and this additional investment offsets the total decline in investment by about 50%.
Keywords: Telecommunications, competition, unbundling, investment
JEL Classification: K23, L10, L50, L96, O33, 038
Suggested Citation: Suggested Citation