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Economic replicability tests for next-generation access networks

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  • Jaunaux, Laure
  • Lebourges, Marc

Abstract

This paper discusses the relevant cost standard for the economic replicability test for Next-Generation Access (NGA) networks, described in the “Recommendation on consistent non-discrimination obligations and costing methodologies” adopted by the European Commission. According to the Recommendation, in order to reconcile investment and competition, wholesale prices should have nonlinear characteristics and only partly vary by the number of accesses. It demonstrates that a cost standard for the economic replicability test, which implies fully fixed and variable cost recovery for the access seeker, including the total wholesale price, would be incompatible with the economics of NGA networks and that such a test would deter NGA investment. Therefore, the cost standard should include only the variable part of the wholesale price. However, this paper underlines that during a transition phase, until competitors have secured access to NGA infrastructure, a second temporary test called the “competition migration test” should be added to ensure incumbent NGA retail prices do not foreclose efficient copper-based entrants. The two proposed tests surpass the limits of the “ladder of investment” theory by including the “business migration effect” developed by Bourreau, Cambini, and Dogan (2012).

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  • Jaunaux, Laure & Lebourges, Marc, 2015. "Economic replicability tests for next-generation access networks," Telecommunications Policy, Elsevier, vol. 39(6), pages 486-501.
    • Handle: RePEc:eee:telpol:v:39:y:2015:i:6:p:486-501
    DOI: 10.1016/j.telpol.2015.02.004
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    References listed on IDEAS

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    Cited by:

    1. Krämer, Jan & Schnurr, Daniel, 2018. "Margin squeeze regulation and infrastructure competition," Information Economics and Policy, Elsevier, vol. 45(C), pages 30-46.
    2. Charalampopoulos, George & Katsianis, Dimitris & Varoutas, Dimitris, 2020. "Investigating the intertwining impact of wholesale access pricing and the commitment to net neutrality principle on European next-generation access networks private investment plans: An options-game a," Telecommunications Policy, Elsevier, vol. 44(3).
    3. George Charalampopoulos & Dimitris Katsianis & Dimitris Varoutas, 2022. "Economic replicability tests: an “out-of-the-box” implementation," Netnomics, Springer, vol. 22(2), pages 115-138, October.
    4. Francisco José García Paramio & Isabel Torre Díez & Beatriz Sainz de Abajo & Miguel López-Coronado Sánchez-Fortún & Joel J. P. C. Rodrigues, 2017. "How does the Spanish regulation of NGN affect to final users? Effects on the deployment of new FTTH infrastructures," Telecommunication Systems: Modelling, Analysis, Design and Management, Springer, vol. 64(2), pages 391-415, February.

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