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Estimating the impact of co-investment on Fiber to the Home adoption and competition

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  • Aimene, Louise
  • Lebourges, Marc
  • Liang, Julienne

Abstract

The demand for faster broadband access is a key driver of FTTH adoption and fixed broadband competition, and therefore of co-investment. This paper assesses the effects on FTTH adoption and competition of FTTH co-investment. Co-investment had indeed been endorsed in the European Electronic Communication Code as a relevant option for conciliating investment and competition. This paper contributes to evaluating this policy option by providing detailed empirical estimates of the influence of co-investment on Fiber to the Home (FTTH) adoption and competition in the French fixed broadband market. We combine several French municipality level datasets and use a two-stage control-function approach to correct for the endogeneity of investor entry. We show that the presence of co-investment leads to an increase of 7.9% in FTTH adoption in 2018. Co-investment offers also enhance competition. Co-investment by competitors causes a decrease in Orange, French incumbent operator, total retail broadband market penetration by 5.9% whereas no co-investment by competitors lets Orange’s total retail broadband market penetration unchanged. Our findings confirm that co-investment supports the policy objectives of adoption and competition and should be supported by regulation.

Suggested Citation

  • Aimene, Louise & Lebourges, Marc & Liang, Julienne, 2021. "Estimating the impact of co-investment on Fiber to the Home adoption and competition," Telecommunications Policy, Elsevier, vol. 45(10).
    • Handle: RePEc:eee:telpol:v:45:y:2021:i:10:s0308596121000434
    DOI: 10.1016/j.telpol.2021.102139
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    References listed on IDEAS

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    More about this item

    Keywords

    Entry model; FTTH coverage; FTTH adoption; Competition; Co-investment;
    All these keywords.

    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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