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Is policy adapting to its market, or vice-versa? Evaluation of policy … · 2017. 12. 19. · Is...
Transcript of Is policy adapting to its market, or vice-versa? Evaluation of policy … · 2017. 12. 19. · Is...
Ispolicyadaptingtoitsmarket,orvice-versa?EvaluationofpolicymeasuresontheFTTHmarket.
MarliesVanderWee1*,AlbertDomingo2*,SofieVerbrugge1,MiquelOliver2
*Correspondingauthor.1GhentUniversity–iMinds,Belgium,2UniversitatPompeuFabra,Spain.
[email protected], [email protected], [email protected] ,
[email protected] 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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