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Race to the top: Does competition in the DSL market matter for fibre penetration?

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  • Fourie, Helanya
  • de Bijl, Paul W.J.

Abstract

High speed broadband creates potential productivity gains and has a positive impact on economic growth. Achieving Europe's broadband access objectives will require large scale investment in next generation broadband networks, and it is imperative that an appropriate investment climate is created to encourage fibre network rollout. This study considers whether and how competition in the DSL market affects the incentives of operators to invest in the deployment of high-end fibre optic networks. Most earlier research on the drivers of investment in broadband technology has focused on the effect of mandatory access policies, such as local loop unbundling, or competing infrastructures. We posit that competition in the DSL sector may also influence fibre penetration, possibly to a considerable extent. We find that the relationship between service-based competition and fibre penetration is non-linear: a lack of or severe DSL competition is correlated with a negative effect on fibre penetration, but if a moderate degree of competition is already present in the market, more service-based competition may positively influence fibre penetration. The scale of these effects however varies with the openness of the DSL market: operators' incentives to invest in fibre appear to be more sensitive to changes in DSL competition if there is extensive local loop unbundling.

Suggested Citation

  • Fourie, Helanya & de Bijl, Paul W.J., 2018. "Race to the top: Does competition in the DSL market matter for fibre penetration?," Telecommunications Policy, Elsevier, vol. 42(9), pages 778-793.
    • Handle: RePEc:eee:telpol:v:42:y:2018:i:9:p:778-793
    DOI: 10.1016/j.telpol.2017.11.003
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    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. Sahebali, M. W. W. & Sadowski, Bert M. & Nomaler, O. & Brennenraedts, R., 2019. "Infrastructure Rollout and Fibre Provision: The case of NGN in the Netherlands," 30th European Regional ITS Conference, Helsinki 2019 205210, International Telecommunications Society (ITS).
    4. Abrardi, Laura & Cambini, Carlo, 2019. "Ultra-fast broadband investment and adoption: A survey," Telecommunications Policy, Elsevier, vol. 43(3), pages 183-198.
    5. Fabian Queder, 2020. "Towards a vertically separated broadband infrastructure: The potential role of voluntary separation," Competition and Regulation in Network Industries, , vol. 21(2), pages 143-165, June.
    6. Queder, Fabian, 2020. "Competitive effects of cable networks on FTTx deployment in Europe," Telecommunications Policy, Elsevier, vol. 44(10).
    7. Vitor Miguel Ribeiro & Lei Bao, 2021. "Impact of next‐generation access networks on the innovation efficiency of Portuguese municipalities: A spatial econometrics approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1615-1637, October.

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    More about this item

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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