Ispolicyadaptingtoitsmarket,orvice-versa?EvaluationofpolicymeasuresontheFTTHmarket.

MarliesVanderWee1*,AlbertDomingo2*,SofieVerbrugge1,MiquelOliver2

*Correspondingauthor.1GhentUniversity–iMinds,Belgium,2UniversitatPompeuFabra,Spain.

marlies.vanderwee@intec.ugent.be, albert.domingo@upf.edu, sofie.verbrugge@intec.ugent.be ,

miquel.oliver@upf.eduAbstractThere currently is a large variety in the policy and regulations that are steering thedevelopmentsoftelecommunicationnetworksworldwide.Specifically,inthedeploymentoffuture-basedfixedbroadbandnetworks(Fiber-to-the-Home),differentregionsandcountriesaretakingadifferentapproach.Forexample,wheretheUSruledthatbroadbandprovidersshouldnotbesubjecttolast-mileunbundling,someothercountriesfromEurope(Portugal,Spain),aswellascountriesintheAsia-Pacificregion(Japan,NewZealand)areregulatingitwithdifferentapproaches.BycomparingaselectionofOECDcountriesontheirpolicyapproach,competitionstatusandfixedbroadbandpricing,thispaperaimsatevaluatingtheimpactofcertainpolicyapproachesonnetworkdevelopmentandmarketevolution.ThepaperconcludesthatthereisnocleartrendbetweentheGDPpercountryanditsbroadbandentrypricing(i.e.thelowestpricefora25Mbpsdownloadoffer.Countriesthathavelessparallelinfrastructures(DSL,cableDOCSISand/or FTTH) typically have lower broadband retail pricing. Unbundling or wholesaleobligationsclearlyleadtoahighernumberofcompetingserviceproviders(offeringservicesusing thesameunderlying infrastructurenetwork),butdoesnotnecessarily leadto lowerretailpricing.Countrieswithgovernmentinvestmentinruraland/orurbanareasreportmoreserviceprovidercompetitionthancountrieswithoutgovernmentinvestment.Thismightbeanaturaltrend,orfollowingfromthefactthatifgovernmentsinvestinvestinurbanandruralareas,theymakeclearthatonlyonefibernetworkisgoingtobesustained.

Keywords:Fiber-to-the-Home,policy,businesscase

1 IntroductionandmotivationThetelecommunicationssectorhaslongbeeninthehandsofnationalmonopoliesinEuropeandAsia,whilealimitednumberofprivateundertakingswereinchargeofthemarketintheUnitedStates.Liberalizationandregulationeffortsbroughtanewdynamictothismarket,whiletheintroductionofbroadband,andmorerecentlyFiber-to-the-Home(FTTH),providesopportunitiesfornewplayers,bothontheinfrastructureandservicemarket.

Ontheinfrastructureside,thedeploymentofFTTHnetworksisbecomingmoreandmoreaneconomic challenge (Van der Wee et al., 2014; Domingo et al., 2014), rather than atechnologicalone,asthedeploymentofthisnewinfrastructurerequiresasignificantupfrontinvestment. While some countries stimulate the involvement of the government intodeployingthe infrastructure– likeJapanorNewZealand,othersareworkingtoraisenewbarriers for public institutions to invest their funds into deploying new networks (US orEurope)(FCC,2015.a,EuropeanCommission,2014).Exceptionsinbothregionsareruralandareaswithdifficultaccess,wherepublicfundsareallowedundercertainconditions.

Currently,thereisaplethoraofregulatoryobligationsandguidelines,whichstronglydifferacrosscountries.Oneofthemoreimportantpointsreferstotheneedforunbundlingoropenaccessonfiberinfrastructure,similartounbundlingobligationsoncopper-basednetworks.WheretheUSruledthatbroadbandprovidersshouldnotbesubjecttolast-mileunbundling,someothercountriesfromEurope(Portugal,Spain),aswellascountriesintheAsia-Pacificregion (Japan,NewZealand) are regulating itwithdifferent approaches.Apart fromclearregulatoryobligations,somecountriesorregionsalsosetdedicatedtargetsforbroadbandcoverageanduptake.Themostwell-knownexamplecanbefoundinEurope’sDigitalAgenda(30Mbpstoallby2020)(EC,2010),whiletheFCCintheUSwithanAgendaofthesameyear(FCC, 2010) now followswith aminimum target of 25Mbps definition of broadband thatupdates the 2010 Agenda (FCC, 2015.b).While these targets aim at stimulating networkdeploymentinlesspopulatedregions,theyseemtobeanewtooltoshowevidenceofnotneedingtoupgradethenetworkinotherareas.

Althoughtheseregulatoryrecommendations,guidelinesandtargetsallaimatprovidinghigh-quality,yetaffordable,servicestoendusersinacompetitivemarket,thereislittletonoproofoftheiractualeffect.Therefore,bycomparingaselectednumberofOECDcountriesontheirpolicy approach, competition status and fixed broadband pricing, this paper aims atevaluatingtheimpactofpolicyonthebroadbandmarket.

Thenext section shortly introduces the framework, basedonparameters (input) andKeyPerformanceIndicators(output.Section3introducestheOECDcountriesandcomparesthemonpolicyapproachesandtheirimpactontheidentifiedKPIs.Finally,asummaryandsomededicatedrecommendationsconcludethepaper(section4).

2 FrameworkforcomparisonThispaperaimsatcomparingthebroadbandpolicyanddeploymentapproachindifferentOECD countries based on a number of selected parameters (input) and Key PerformanceIndicators(KPIs–output).Comparingtheseinputandoutputparametersallowforassessingthe impact of broadband deployment approach and related policy on the broadbandavailabilityandpricingforendusers.Apartfromtheseselectedparameters,theauthorsrelyonanextendedcasestudyknowledge(VanderWee,2015;Domingo,2015)fortheanalysis.

Five input and three output parameters were selected. On the input side, the authorsevaluatedboth the strategicplanand theactual governmentandpolicy involvement. Foreachoftheanalyzedcountries,thebroadbandplanwasstudied:is itaconcreteplanwithquantifiable targets (e.g. the percentage of the population that should be covered withspecified data rates) or is the plan seen as a more strategic vision without specificidentificationofthegoals?Secondly,theauthorsassesstheinvolvementofthegovernmentintermsofdirectorindirectinvestment.Doesthegovernmentprovidefinancialsupportforalltypesofareasoronlyforlow-densityregions?Isthesupportadirectgrantordoesittaketheformofsubsidies?Thethirdandfourthparameteraimatassessingthepolicyapproachinthecountry:isthereanunbundlingobligationorevenawholesale-onlyobligation,andifso,onwhatlayerofthenetworkaretheseobligationsset(passiveinfrastructure(darkfiber),wavelength or bitstream)? Finally, the country’s GDP is used as a representation of itsinvestmentpotential.

TheseinputparametersarecomparedtothreeKPIs:broadbandpricing,infrastructure-basedcompetition and service-based competition. Broadband pricing denotes the retail priceschargedtotheenduserfortheentryoffer(giventhatbroadbandisdefinedasreachingaminimumdownloadspeedof25Mbps).TheywerecollectedfromOECDdataandexpressedinUSDPurchasingPowerParity(PPP).ThesecondandthirdKPIgiveinsightsinthelevelofcompetitionforeachcountry:infrastructure-basedcompetitionindicatesoperatorsthatofferservicesrunningontheirownnetwork,whileservice-basedcompetitionisdefinedbasedonthenumberoftelecomprovidersthatusestheleasedlinesofanetworkoperator.

3 ComparingpolicyapproachesonKPIsThissectionpresentstheactualcomparisonofselectedcountriesandtherelatedanalysis.Wewillfirstgiveanoverviewoftheselectedcountriesandthecollectedparameters,afterspecificgraphswillbedistractedtoallowforamoredetailedcomparisonandanalysis.

3.1 OverviewofselectedcountriesIn this paper, we focus the analysis on a selected number of OECD countries: Australia,Belgium,Chile, France,Germany, Ireland, Japan, theNetherlands,NewZealand, Portugal,Spain,SwedenandtheUnitedStatesofAmerica.AscanbeseenfromFigure1below,theauthorsputafocusonWesternEurope,butallowforaworldwidecomparison.Thetablesbelow(Table1andTable2)providethecollectedinputandoutputparameters,respectively.

Figure1:Overviewofselectedcountries

Table1:Overviewofinputparametersfortheselectedcountries

Country BBplan?(Domingo,2015)

Governmentinvestment unbundlingobligation? wholesaleonly? GDP(USDPPP)(OECD,2014)

Australia yes yes No,becausewholesale-only Yes,foralltechnologies,FTTHincluded 44612

Belgium yes no -Yes,bitstreamforcableandDSL(noULLforVDSLvectoring)-NoregulationforFTTH

no42987

Chile yes InvestmentinWi-Fi Onlyinsidebuildings,butnoULLobligations no 22254

France yes Yes,overallinvestmentunderPPPform

ULLforcopper,notforfiber no 38858

Germany yes Under-coveredregions(whitespots)

ULLandbitstream,noULLforVDSLvectoring

no 44788

Ireland yes UnderservedareasunderPPPinvestmenttype

Europeanones,YesforDSL

no 47796

Japan yes yes1 YesforDSLandproposalforFTTH no 36485

TheNetherlands

Yes(onlyinPPPschemes)

No(apartfromsomePPPexceptions)

Yes,bitstreamandULLforDSL Yes,wholesale-onlyforReggefiber 47635

NewZealand yes YES:bothurban-UFB(Ultra-FastBroadband:FTTH),andrural-RBI(RuralBroadbandInitiative)

Yes(infrastructureseparationmandatory) yes

36401

1ThecaseofJapanisshownasdirectgovernmentinvolvementastheStateholdsmorethanathirdofNTTshares(theincumbentoperator).

Portugal yes Lineofcredittocovertheentirecountry

YesxDSL no 28317

Spain yes Yes:PPPonruralorunderservedareas(nocompetition)

YesxDSL no33720

Sweden Yes Yes:mainlyforruralareas YesxDSL Yesforpublicly-fundedregionalFTTHinitiatives 45113

UnitedStatesofAmerica

yes Yes:mainlyforruralareas YesxDSL no54640

Table2:Overviewofoutputparametersfortheselectedcountries

Country BBentryprices2(VATincluded),inUSDPPPfor2014

competitioninfrastructure competitionservicelevel

Australia 35.18 Telstra,Optus(bothhaveDSLandcable)NBNCodeployslimitedFTTH

52serviceprovidersontheNBNCo,SMPdesignatedbyareaare:Telstra,Optus,iiNetandTPGTelecom.

Belgium29.87

Proximus(DSL,FTTC)Telenet/VOO(Cable)AlmostnoFTTH

Verylimited

Chile 61.61 Telefonica(Movistar),VTR,Entel(thosecompetewithcableandFTTH)

Verylimited

France

34.91

3mainoperatorsOrangewithDSLandFTTH,Numericable-SFR(cable,FTTH)Free-illiadwithFTTH

Verylimitedtonone.

2BBisover25Mbpsandincludingfiber(FTTC,FTTB,FTTH),exceptforChilethatisover25MbpsoverxDSLaccess

Germany40.24

DeutscheTelekom(VDSL),localmunicipalFTTHinitiatives(e.g.Munich,Cologne,etc)Vodafone(Cable)

Verylimited

Ireland28.14

Eircom(DSLandFTTH)UPCIreland(Cable),Vodafone(FTTH)

MainlyonDSLthroughbitstream(35%)andLLU(15%)

Japan 25.81 3mainnetworkproviders:NTTEast,NTTWest,KDDI(FTTCandFTTH)

20FTTH13xDSL

TheNetherlands 41.93

KPN(DSLandFTTHthroughReggefiber)UPC(cable)Localinitiatives(FTTH)

Around12perareaonReggefiber'snetwork

NewZealand33.85

LocalFiberCompanies(FTTH)Chorus(xDSL)Limitedcable

87SPsintotal,about10perarea

Portugal 38.11 PT(MEO)(DSLandFTTH)Cobovisao(cable)

Limited

Spain49.07

Telefonica(DSLandFTTH)Vodafone/ONO(CableandFTTH)Orange/Jazztel(xDSLandFTTH)

Around6perarea

Sweden49.07

TeliaSoneraandTelenor(DSLandFTTH)Stokab(FTTH)inStockholmandover150small-scaleregionalFTTHinitiativesComHem(cable)

regionalFTTHinitiatives:darkfiber+competitionontop

UnitedStatesofAmerica

69.664competitorsonnationallevel:ComCast(cable),ATT(DSLandlimitedFTTH),Verizon(cableandFTTH),TimeWarner(cable)Smallplayers(e.g.GoogleFiber)

Around8perarea

3.2 ImpactofGDPonbroadbandentrypricingFigure 2 shows the different broadband entry prices (OECD, 2014) expressed inUSD PPPversusthecountries’GDP(OECD,2014)expressedinUSDPPP.Itcanbeobservedthatthereis no direct correspondence (no increasing trend as onewould expect), broadband entrypricesrangefrom$25to$50(VATincluded)inmostoftheanalyzedcountries.ExceptionalcasesaretheonesforChileandtheUSA.WeassumethatforChilethegeographyplaysahugebarrierfornetworkoperatorswhendeployingfiber.Ontheotherhand,theUSpriceforbroadbandishigherduethepricesettingintripleplayoffers.Whenapriceistoohigh(theTVpriceintheUSleadstheoffer)theotherservicespricesareofferedwithahigherpricetonotshowsuchabigdifferencegapbetweenthem,(Domingo&Lehr,2013).Asmanyothercountriesalsorelymainlyontriple(orevenquadruple)playoffers(e.g.Belgium,Spain),thismightnotprovideasufficientreasonforthishigherpricingintheUS.

Figure2:BroadbandentrypricesversusGDPpercountry

WehavetotakeintoaccountthatthepricesinFigure2areentrypricesforbroadbandretailoffers over 25Mbps. When we put this into context, by comparing how much of thisbroadbandoffersarebought,wecanhavetherealimpactofthefixedbroadbandmarket.Forinstance,inthecaseofChile(Figure3),itcanbeobservedthatthereisnomarketshareover25Mbps,andtheentrypriceisconsideredtoohighformostofthepopulation.TheUSbroadbandshareof thebroadbandmarket isalsooffering theperceptionthatbroadbandconnectionwasOKtoaccesstheInternetwhiletheywerefocusedonContentandServices.Since2015,withtheFCCrulinganewbroadbanddefinition(downloadspeedforbroadbandshouldbe25Mbpsorhigher),mostoftheusersrealizedthattheydonothaveabroadbandconnection,andthattheywillneedtopayattentiontothedataspeedwhenbuyinganewtelecomservicebundle.

Figure3:Downloadspeedforbroadbandsubscriptionspercountry

AlthoughwehaveusedtheUSPPPPforbothBBpricingandGDP,theabsolutenumbersdonotshowacleartrend.However,astheGDPcanbeseenasameasureofeconomicprosperityinacountry,itcanrepresenttheinvestmentcapacityinacertaincountry.AsFigure4shows,Chilestillistheoutlier,withaveryhighentrypriceforfixedbroadband(over25Mbps).Apartfrom themountainous geography leading to ahigherdeployment cost (andhenceprice),another reason is that theChileangovernmentand regulatoryeffortsare focusingon thewirelesscoverage,andeventheirDigitalAgendaisplannedoverwirelessenhancementasitcan have a higher impact on the short run. But what does explain the broadband pricedifferences in the other countries? We will continue our investigation by comparingbroadbandpricingontheotherconsideredparameters.

Figure4:RankingofcomparedcountriesaccordingtotheBBpricing/GDPratio(bothexpressedinUSDPPP)

3.3 ImpactofinfrastructurecoverageonbroadbandpricingTheinfrastructurecompetitioncolumninTable2providesagoodindicationofthenumberofcompetingphysicaloperators(i.e.operatorsthatarerelyingontheirownnetwork)thatareonthemarketineachcountry.Astheseoperatorsarehowevernotalwaystargetingthesame area, it is not fair to use this number to indicate the level of infrastructure-basedcompetitionineachcountry.

We hence propose a different parameter for analysis: infrastructure coverage, whichwedefineasthenumberofparallelinfrastructuresbeingdeployedandoperated.Asweconsideronlyfixedbroadbandinfrastructures(copper,cable,fiber),thisnumberliesbetween0and3,

Ireland Belgium Japan Australia TheNetherlands

France Germany NewZealand

Sweden UnitedStatesofAmerica

Portugal Spain Chile

ratioBBpricingoverGDP

and is based on the actual copper and cable coverage (OECD, 2009) and a FTTH rankingcoverage(0-1,instepsof0.25)basedontheliteraturereviewperformed.

Figure5visualizesthebroadbandentrypricingincomparisontothisinfrastructurecoverageparameterandclearlyshowsapositivecorrelation.Thisobservationconfirmsthatdeployingfullparallelinfrastructures(infrastructure-basedcompetition)mayincreasecompetition,butdoesnotnecessarilydecreasepricesfortheendcustomers(onthecontrary).

Figure5:Broadbandpriceversusinfrastructurecoverage

In comparison to the results above,wehave to note that some countries (e.g. Lithuania,Portugal)haveimplementedanalternativetothisinfrastructurecoveragebasedonseparatetechnologies.Thepolicyinthosecountriesallowsforsharingductsamongstoperators,whichleads toaduplicationof infrastructurecoveragewithouthaving to incur themainpartofactualnetworkdeploymentcost(trenching)(Felten,2016).Sincethesepracticeshaveonlyemergedrecently,theyarenottakenupinouranalysis.

3.4 Theeffectofservice-basedcompetitionTheabovedescribedapproachofsharingductsofferstheopportunityofinfrastructure-basedcompetition,andalthoughthismightbeagoodwaytomaximizetheuseoftrenchedducts,itisnottheonlywaytomakeoptimaluseofdeployedinfrastructure.Existingnetworkscanalsobesharedby leasingoutfibers,wavelengthsorbitstreams(virtualcapacity)tootheroperators (see Figure 6). As this leasing/sharing is not the direct preference for existingoperators (they allow competitors to enter the market without having to incur the fullnetwork deployment investment). There are two options for sharing the infrastructure:throughunbundlingorthroughwholesale(openaccess).

Unbundlingreferstothecaseinwhichasingleactorisexploitingbothaparticularlayerandthelayerontopofthat,whilestillallowingtheco-existenceofotheractorsontopofitsown

Chile

Australia

Ireland

NewZealandFrance

Germany

BelgiumJapan

UnitedStatesofAmerica

Sweden

TheNetherlands

Spain

Portugal

0

10

20

30

40

50

60

70

80

0 0.5 1 1.5 2 2.5 3

Price(USDPPP)versusinfrastructurecoverage

passiveinfrastructure/network(e.g.PIP–PhysicalInfrastructureProvider–alsoactsasNP–NetworkProvider,incompetitionwithalternativeNPs).

Awholesaleobligation,ontheotherhand,referstothesituationinwhichthelowerlayerisprovisioned inanondiscriminatoryway todifferentactorson the layerabove (PIP isonlyallowedtheroleofPIP).Themaindifferencewithunbundlingisthattheactorresponsibleforthelowerlayerisnotallowedtoactinthelayersabove.

Figure6:Unbundlingandwholesaleoptions

Asthereisno(single)sourceavailablethatprovidescomparable,quantitativeestimatesforthe unbundling, wholesale and service provider numbers, we rely on country-specificinformation and amore qualitative comparison. Figure 7 compares the countries on thenumberofserviceprovidersperarea(relativesizeofthebubbles)andthelevelofunbundlingor wholesale obligation (position on the Y and X-axis, respectively). This graph clearlyindicatesthatincreasinglevelsofunbundlingandwholesalealsoleadtomoreservice-basedcompetition,andthattheinthecaseofwholesale-onlyoffers,thenumberofcompetitorsishigher.ThisobservationsurelyisthecaseinNewZealandandtheNetherlands,wheretheFTTHnetworkdeployedisafullopenaccessnetwork.InthecaseofNewZealand,aPublic-PrivatePartnershipwas setupbetween thegovernmentand four Local FiberCompanies.Thesecompanieswereselectedbasedonatenderprocedure;eachofthemhasthemonopolyondeployingFTTHintheirrespectiveareas.OntopoftheseLocalFiberCompanies,many(upto 87 country-wide) service providers contract end users. A similar structure led to thefoundingofReggefiberintheNetherlands,who,althoughnowsubsidiaryoftheincumbentKPN,onlyoffersdarkfibertothetelecomoperators.

Fiber

Wavelength

Bitstream

Physicalinfrastructureprovider(PIP)

Networkprovider(NP)

Serviceprovider(SP)

Figure7:Qualitativecomparisonoftheimpactofwholesaleandunbundlingobligationsonservice-basedcompetition(thesizeofthebubblesshowstherelativeamountofserviceprovidersactiveinthecountry)

ThecaseofJapanisaspecificone.Competitionwasfirstpromotedinthesenseofcopperunbundling.In2004NTTdecidedtoroll-outfiber,andwhenthegovernmentsawthatNTTwasnearlyreachingitspaybackoftheeffortdonebydeployingthecountry’sfibernetwork,decreasedtheunbundlingfiberprice(bitstreamoption)belowtheoneofcopper.Thatway,serviceproviderswere forcedtomoveto the fibernetwork.This isaniceexampleof thegovernmentusingitsregulatorypowertointroducecompetitionwiththeuseofunbundlingpricing,withouttheneedforawholesale-onlyregulation.

AsimilareffectcanbeobservedinthecaseofSpain.Initially(in2009),theCMT(nowinsidethesupra-regulatorCNMC)setthisthresholdforunbundlingregulationat30Mbps,i.e.linesofferingahigherdownloadspeedwouldnothavetobeunbundled.This regulationhadadirecteffectonfiberdeployment,asitramped-uptothecopperlevels.Itfurthermorealsotriggeredinvestmentsinruralareasasthisnon-obligationledtoamoresecurebusinesscaseforthedeployingoperator.Nowfiberdeploymentismoremature,Spainistoregulatethefiberunbundlingasabitstreamoption(CNMC2016.a).Figure8showsasimilargraphfortheJapaneseandSpanishfixedmarket,beitwithatimingdifference.

Wholesale

Unbundling

Australia

NewZealand

Belgium

Chile

FrancePortugal

Ireland

Japan

Netherlands

Germany

Spain

SwedenUS

(a)

(b)

Figure8:(a)Japanesefixed-accesstechnologytake-uprateevolution.VerticalAxisshowsthenumberofsubscribersinthousands(Imagesource:Akematsuetal.2012),(b)Spanishfixed-accesstechnologytake-up

rateevolution.(Datasource:CNMC2016.b).

If we however compare the countries’ entry pricing with the level of service-basedcompetition,weseenogeneraltrend…Wecanhenceconcludethatahigherlevelofservice-basedcompetitiondoesincreasethechoicefortheendcustomer(ahigherdiversificationinoffers,morevariationindatarates,downloadvolume,andtriple/quadrupleplayoptionstochoosefrom),butnotnecessarilyreducetheretailpricing.

3.5 ImpactofgovernmentinvestmentWhencomparingthecountriesinTable1, itseemsthatmostofthepublicmoneygoestoclosingthegapwithruralareas. For instance, inSpainthereisaPPPformula ifyoubringbroadbandover100Mbpsoffertoaruralarea,whichislaunchedeveryyearaspartoftheDigital Plan (until 2020). This approach follows the European user-centered policy thatsupportsoperatorsthatwanttodeployinfrastructuretouncovered(white)areas(Europe,2014).IntheUnitedStates,however,therenosuchclearsupporttodeploynewnetworks.

Whencomparingthegovernmentinvestmentandservicecompetitionlevel,wecanobserveinFigure9thatangovernmentinvestmentinruraland/orurbanareasclearlyincreasesthenumberofserviceprovidersuserscanchosefrom.

Figure9:Governmentinvestmentinfixednetworks:comparisonofnone,mainlyruralareas,orurbanandruralwiththenumberofServiceProviders(thesizeofthebubblesshowstherelativeamountofserviceproviders

activeinthecountry)

Figure9showsthatthenumberofSPsisbiggerincountriesthatinvestmoneytocatalyzesomeofthenon-sustainableprojectswithonlyprivatecapitalinvestment.ItshouldbenotedthatinthecaseoftheNetherlands,themaingovernmentinvolvementwasdoneininitializingthe FTTH deployment (e.g. the project in Amsterdam, where the local governmentparticipatedasamarketinvestor(FTTHCouncilEurope,2010)).Ontheotherhand,PortugalandFrancehavejuststartedinvestingindeployingthefibernetwork,whileitmighttakesometimetogettheexpectedSPcompetitionontopoftheirfibernetwork.

Ontheotherhand,thehigherserviceprovidercompetitionmightbeaconsequenceofthegovernment’srequirementtoonlydeployoneinfrastructurenetwork(asisthecaseinJapan,AustraliaandNewZealand).Ifcompetitorswanttoenterthatspecificmarkets,theyhavenootherchoicethantoleasefiberorconnectivityfromtheexistingoperator.

Chileisacountrydevotedtoincreasebroadbandcoverage,andtheirfirstapproachseemscorrect:afasterandmoresustainablesolutionisreachedwithwirelesstechnologies.Hence,againChileisanoutlier:thereissignificantgovernmentinvestment,butnotinfixedtelecominfrastructure.

If on the other hand,we compare government investmentwith retail pricing,we do notobserveacleartrend.Figure10onlypointsslightlytotheinformationthatinvestinginbothruralandurbanareas,woulddecreasetheretailmarketprice.Ontheotherhand,Figure4setclearthatretailpricingisquitesetinaccordanceofGDP.

Figure10:Governmentinvestmentinfixednetworks:comparisonofnone,mainlyruralareas,orurbanand

ruralwiththeretailbroadbandentryprice

4 SummaryandrecommendationsBroadbandisbecomingmoreandmorerecognizedasabasicneedforpeople,especiallyafterthepolicyguidelinessetoutbyforexampletheEuropeanUnioninitsDigitalAgenda.Moreandmorecountrieshavehenceinvestedtimeandeffortindraftingastrategyandplanforbringingbroadbandtoalloftheircitizens.Therearehoweversignificantdifferencesinthepolicyapproachestakenbydifferentregionsandcountries,anditisnotclearwhatthebestapproachis.

Therefore, this paper selected a number of countries (OECDworldwide, with a focus onWesternEurope)tocomparepolicyapproachesandtheireffectonthemarketoutcome.Anumber of input and output parameters (KPIs) was selected. On the input side, theparameters are: the availability of a broadband plan, financial involvement of thegovernment,unbundlingorwholesaleobligationsandGDPasameasureoftheinvestmentcapacityofeachcountry.TheoutputparametersorKPIsarethebroadbandpricingandlevelofcompetition(bothinfrastructureandservice-based).

Thepaperdrawsanumberofmainconclusionsrelatedtobothlevelofcompetitionandretailpricing.ThereisnocleartrendbetweentheGDPpercountryanditsbroadbandentrypricing(i.e. the lowest price for a 25Mbps download offer), although it needs to be noted thatbroadbandentrypricingismuchhigherinsomecountriesbecausethereisnomarket(yet)forthislevelofbroadband.

Countries thathave lessparallel infrastructures (DSL, cableDOCSIS and/or FTTH) typicallyhavelowerbroadbandretailpricing.Thisconfirmsthatthereisnobusinesscasefordeployingmultipleinfrastructurenetworksinparallel.

Competitionon theother hand is necessary to ensure consumer choice and keeppricingdown.Unbundlingorwholesaleobligations clearly lead toahighernumberof competingserviceproviders (offeringservicesusingthesameunderlying infrastructurenetwork),butdoesnotnecessarily leadtolowerretailpricing.Countrieswithgovernmentinvestmentinruraland/orurbanareasreportmoreserviceprovidercompetitionthancountrieswithoutgovernment investment. Thismight be a natural trend, or following from the fact that ifgovernments invest invest in urban and rural areas, theymake clear that only one fibernetworkisgoingtobesustained(asisthecaseinJapan,AustraliaandNewZealand).

Chileisaconstantoutlierinallgraphicsshowninthispaper,likelybecauseoftwomainfacts:their Digital Agenda points to a quick wireless coverage and nobody is buying a fixedconnectionat25Mbps,asitisconsideredoutoftheircurrentspeedmarket.

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