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Role of access charges in the migration from copper to FTTH

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  • François Jeanjean
  • Julienne Liang

Abstract

We consider a horizontally and vertically differentiated duopoly model in order to analyse both intra- and inter-platform competition in a fully covered broadband access market (copper-copper, copper-FTTH and FTTH-FTTH competitions). The model is purely static and does not address dynamic efficiency issues. It shows that the copper access charge plays a significant role in the migration from copper to FTTH and in FTTH investment incentives provided that consumers are segmented according to the access network technologies. In FTTH-infrastructure-based competition, only one of the two operators has incentives to invest in FTTH in less dense areas. Rival's investment incentives react positively to the access charge level. However, the incumbent's investment incentives are far less sensitive to the access charge for the reason that the gain from FTTH advantage is negatively impacted by the revenue loss in the wholesale market. The more competitive the broadband market is, the higher an access charge is required in order to enhance the rival's FTTH coverage. A regulation of copper access charge above its cost level leads to a higher level of nationwide FTTH coverage and social welfare.

Suggested Citation

  • François Jeanjean & Julienne Liang, 2012. "Role of access charges in the migration from copper to FTTH," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, vol. 2(3), pages 298-317.
    • Handle: RePEc:ids:ijmnec:v:2:y:2012:i:3:p:298-317
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    Cited by:

    1. Aimene, Louise & Lebourges, Marc & Liang, Julienne, 2019. "Estimating the impact of co-investment on fiber to the home coverage, adoption and competition," 30th European Regional ITS Conference, Helsinki 2019 205160, International Telecommunications Society (ITS).
    2. Eltges, Fabian & Fourberg, Niklas & Wiewiorra, Lukas, 2022. "From legacy to the future: Incentivising demand migration through access fees," WIK Working Papers 3a, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH, Bad Honnef.
    3. Eltges, Fabian & Fourberg, Niklas & Wiewiorra, Lukas, 2021. "Copper to fibre migration: Regulated access fees incentivising migration," WIK Working Papers 3, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH, Bad Honnef.
    4. 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).
    5. Lebourges, Marc & Liang, Julienne, 2018. "Estimating the impact of co-investment in fiber to the home coverage," 29th European Regional ITS Conference, Trento 2018 184953, International Telecommunications Society (ITS).
    6. Eltges, Fabian & Fourberg, Niklas & Wiewiorra, Lukas, 2022. "Copper to Fibre Migration: Regulated Access Fees Incentivising Migration," 31st European Regional ITS Conference, Gothenburg 2022: Reining in Digital Platforms? Challenging monopolies, promoting competition and developing regulatory regimes 265623, International Telecommunications Society (ITS).

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