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• W2331702248 abstract "Competition is the key incentive for an incumbent telecommunications copper network provider to invest in a next-generation network. Yet many regions and cities are served by only a single provider, even in countries where there is competitive broadband in major cities. For example, 28% of US cities have only one broadband provider. In New Zealand, the copper local loop is the only fixed access to the Internet for around 89% of households, with cable passing only 11% of households.This paper analyses how provision of faster broadband service in conditions of little or no competition can be efficiently induced. It compares the New Zealand, Australian and a selection of European country policies in terms of a framework provided by an approach to efficiency that analyses: (1) the incentive for construction of the FTTX network at lowest cost, (2) the incentive for pricing of FTTX services to be allocatively efficient and, (3) the minimisation of taxpayer or end-user subsidisation given the deadweight cost of such subsidisation.Specifically, the paper assesses the efficiency of the New Zealand approach which operates by requiring would-be network constructors of FTHH network, including the incumbent, to compete for government funding to partially bridge the period between construction and take up. The efficiency of this approach is compared to that of the Australian approach in which a new government-owned enterprise is building a FTTX network and the European approach, where initiatives for introduction of FTTH networks are city or region based, when public funds are used, with commercial led initiatives mainly focussed on regions where incumbents face competition.Highly relevant new information to assist in assessment of the efficiency of the New Zealand approach has recently become available as a result of the modelling of the cost of the FTTH network by the regulatory authority (the Commerce Commission). The regulator has used this modelling to set price caps for the copper network over the next five years which in turn allows an assessment of the likely take up of the FTTH network and pricing efficiency.The analysis focuses on the need for policies to simultaneously address two key issues. Firstly, the incumbent has little incentive to build a new network that would cannibalise their existing network unless they face a competitor who could provide higher speed services. Secondly, entry by a competitor is inhibited by the time it takes for demand for services on a new network to build up since demand relies on end users switching from the existing copper network.Some policies address one of these issues but exacerbate the other. A lower price cap for legacy DSL (or low speed cable) services with a relaxed regulation (e.g. a regulatory holiday) for next generation services addresses the first obstacle. However, the regulatory holiday incentive to upgrade services will likely be largely offset by concern that the low regulated price of legacy services will discourage takeup of the higher speed services. To be successful, a policy needs to address both issues.The authors of this paper are NOT interested in participating in the Poster session." @default.
• W2331702248 created "2016-06-24" @default.
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• W2331702248 date "2016-03-29" @default.
• W2331702248 modified "2023-09-23" @default.
• W2331702248 title "Incentives for an Efficient Transition to FTTX Service Provision" @default.
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