Local competition and the role of regulation: the EU debate and Britain's experience

Competition in local access networks and local loop unbundling have been central in the 1999 review of the EU communications regulatory framework. These issues also figure high on national policy agendas. Competition in local access is thought to stimulate internet penetration and the development of e-commerce and interactive applications, all key elements for the move towards a 'new economy'. Following an analysis of different ways to promote competition in local access networks and a review of the respective EU debate, this paper then concentrates on the relevant developments in Britain. At a broader level, it explores the interplay between EU debates and British policies and actions and the scope for harmonisation of national regulatory regimes. At a more specific level, the paper assesses the evolution of local access competition and relates this to the role of regulation and the question of facilities- vs. services-based entry. It is argued that the introduction of new market restructuring initiatives, such as local loop unbundling, requires a larger involvement by regulators, particularly in the early stages, rather than just a reliance on general competition rules.