تاثیر رقابت داخل پلتفرم در نفوذ پهنای باند  The impact of intra-platform competition on broadband penetration

1. Introduction Operators around the world are deploying new fibre networks (next generation access networks or NGAs) in order to offer very high-speed broadband services. There has been much debate about the role that governments and regulators should play in helping to encourage the deployment these new networks and encourage the adoption of ultra-fast broadband services. A key question is whether access based obligations over copper networks should be extended to fibre infrastructures. The main argument in favour of access regulation is that it makes new entry easier, as the entrant has to build only part of a network, or no network at all. This potentially allows for more intense competition if there is a greater number of market players. However, there is a concern that mandating access could deter operators’ from investing in fibre networks in the first place if the operators think that they will struggle to make a return on their original investment. In most countries, access regulation for copper networks has been in place for a number of years, being introduced in the early 2000s in Western Europe. Entry into broadband markets can take a number of forms. New entrants can make use of the incumbent’s network, which is known as intra-platform competition. Alternatively, entrants can completely bypass the incumbent’s network, using an alternative technology, such as cable broadband. This is known as inter-platform competition. There are different levels of intra-platform competition ranging from resale of the incumbent’s products to full unbundling of the local loop (ULL). Resale requires a much smaller upfront cost to the new entrant compared to ULL, but it also offers much less scope for product differentiation. Another form of access, which sits in between ULL and resale, is bitstream. The figure below summarises the different forms of broadband competition (Fig. 1). Europe is considered to have placed most emphasis on a wholesale broadband access regime. Regulators have relied heavily on wholesale access regulation to promote competition and investment in fixed broadband markets. Although the experience varies across countries, the take-up of the incumbent’s regulated wholesale services has been relatively high. As of January 2012, 45.3% of broadband DSL lines at EU level were provided by new entrants.1 Among these, 98.8% relied on incumbents’ wholesale products, rather than entrants own DSL network. The most popular wholesale product has been full ULL. The popularity of ULL can be explained by the regulatory approach adopted by most jurisdictions in Europe. ULL prices have been set based on costs, which has led to a significant fall in ULL prices over time. Between October 2005 and October 2011 the monthly average total cost of full ULL has decreased from 12.4 to 9.7 euro. For shared ULL access monthly prices decreased from 5.1 to 2.9 euro in the same period. In contrast, in many EU countries, bitstream prices, at least initially, have been set on a retail minus basis, which makes it difficult for bitstream providers to compete on price. As we will explain below, the difference in the approach that regulators have taken to ULL and bitstream may help explain the results obtained in our analysis. Given the current debate about the appropriate form of access regulation for fibre networks, this provides an apt time to review the effectiveness of access regulation for copper networks. This paper adds to this debate by looking at the impact of wholesale broadband policies on broadband take-up, using the latest available data set for the EU27. There are several reasons why we have focused on EU27 countries.