Skip to main content
SpringerLink
Log in

Competition enhancing regulation and diffusion of innovation: the case of broadband networks

  • Original Article
  • Published:
Journal of Regulatory Economics Aims and scope Submit manuscript

Abstract

Regulating former telecommunications monopolies has often been legally and technically complex. Among other options, incumbent operators were mandated to share, sell or split their infrastructure thus encouraging market entry. Given the importance of broadband technologies, competitive access has become a policy priority. We use data from 167 broadband markets over a period of 11 years. Firm and intra-platform competition on the incumbent’s legacy network (Digital Subscriber Line) accelerate adoption of broadband, whereas competition over different access technologies does not. The duration of the different regulatory effects shows that simpler network changes have a long-lasting yet delayed effect compared to technically demanding ones.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Armstrong M., Cowan S., Vickers J. (1994) Regulatory reform: Economic analysis and British experience. MIT University Press, Cambridge MA

    Google Scholar 

  • Armstrong M., Sappington D. E. M. (2006) Regulation, competition and liberalization. Journal of Economic Literature 44: 325–366

    Article  Google Scholar 

  • Aron, D. J., & Burnstein, D. E. (2003). Broadband adoption in the United States: An empirical analysis. In: A. L. Shampine, Down to the wire: Studies in the diffusion and regulation of telecommunications technologies(pp 119–138). Haupaugge,NY: Nova Science Publishers.

  • Bohlin A., Gruber H., Koutroumpis P. (2010) Diffusion of new technology generations in mobile communications. Information Economics and Policy 22(1): 51–60

    Article  Google Scholar 

  • Bouckaert J., van Dijk T., Verboven F. (2010) Access regulation, competition and broadband penetration; An international study. Telecommunications Policy 34: 661–671

    Article  Google Scholar 

  • Bourreau M., Dogan P. (2004) Service-based vs. facility-based competition in local access networks. Information Economics and Policy 16(2): 287–306

    Article  Google Scholar 

  • Cambini C., Jiang Y. (2009) Broadband investment and regulation: A literature review. Telecommunications Policy 33: 559–574

    Article  Google Scholar 

  • Cava-Ferreruela I., Alabau-Munoz A. (2006) Broadband policy assessment: A cross- national empirical analysis. Telecommunications Policy 30(8-9): 445–463

    Article  Google Scholar 

  • Cave M. (2006) Encouraging infrastructure competition via the ladder of investment. Telecommunications Policy 30: 223–237

    Article  Google Scholar 

  • Comin D., Hobijn B. (2004) Cross-country technology adoption: Making the theories face the facts. Journal of Monetary Economics 51(1): 39–83

    Article  Google Scholar 

  • Czernich N., Falck O., Kretschmer T., Woessmann L. (2011) Broadband Infrastructure and Economic Growth. The Economic Journal 121(552): 505–532

    Article  Google Scholar 

  • Denni M., Gruber H. (2007) The diffusion of broadband telecommunications in the US: The role of different forms of competition. Communications and Strategies 4: 139–157

    Google Scholar 

  • Distaso W., Lupi P., Maneti F. M. (2006) Platform competition and broadband uptake: Theory and Empirical evidence from the European Union. Information Economics and Policy 18(1): 87–106

    Article  Google Scholar 

  • Faulhaber G., Hogendorn C. (2000) The market structure of broadband telecommunications. Journal of Industrial Economics 48(3): 305–329

    Article  Google Scholar 

  • Gabel, D., & Kwon, F. (2000). Accessibility of broadband telecommunications services by various segments of the American population. CUNY, Queens College

  • Garcia-Murillo M. (2005) International broadband deployment: The impact of unbundling. Communications and Strategies 57: 83–108

    Google Scholar 

  • Geroski P. A. (2000) Models of technology diffusion. Research Policy 29: 603–625

    Article  Google Scholar 

  • Griliches Z. (1957) Hybrid corn: An exploration in the economics of technical change. Econometrica 25: 501–522

    Article  Google Scholar 

  • Grosso, M. (2006). Determinants of broadband penetration in OECD nations. Paper Presented at the Australian communications policy and research forum, Sydney.

  • Gruber H. (2005) The economics of mobile communications. Cambridge University Press, Cambridge

    Google Scholar 

  • Gruber, H. (2011). European sector regulation and investment incentives: European options for NGA deployment. In I. Spiecker & J. Krämer (Eds.), Network neutrality and open access (pp. 191–202). Baden-Baden: Nomos.

  • Gruber H., Koutroumpis P. (2010) Mobile communications: Diffusion facts and prospects. Communications and Strategies 77(1): 133–145

    Google Scholar 

  • Gruber H., Koutroumpis P. (2011) Mobile telecommunications and the impact on economic development. Economic Policy 67: 387–426

    Article  Google Scholar 

  • Gruber H., Verboven F. (2001) The evolution of markets under entry and standards regulation—the case of global mobile telecommunications. International Journal of Industrial Organisation 19: 1189–1212

    Article  Google Scholar 

  • Guthrie G. (2006) Regulating infrastructure: The impact on risk and investment. Journal of Economic Literature 44(4): 925–972

    Article  Google Scholar 

  • Hausman, J. A., & Sidak J. G. (2005). Did mandatory unbundling achieve its purpose? Empirical evidence from five countries. Journal of Competition Law & Economics, 1(1).

  • Höffler F. (2007) Cost and benefits from infrastructure competition Estimating welfare effects from broadband access competition. Telecommunications Policy 31: 401–418

    Article  Google Scholar 

  • Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The worldwide governance indicators: A summary of methodology. Data and Analytical Issues. World Bank Policy Research.

  • Kessides I. N. (2004) Reforming infrastructure. Privatisation, regulation and competition. World Bank and Oxford University Press, Washington

    Book  Google Scholar 

  • Kim, J. H., Bauer, J. M., & Wildman, S. S. (2003). Broadband uptake in OECD countries: Policy lessons from comparative statistical analysis. Paper Presented at 31st research conference on communication, information and internet policy, Arlington.

  • Kleibergen F., Paap R. (2006) Generalized reduced rank tests using the singular value decomposition?. Journal of Econometrics 133: 97–126

    Article  Google Scholar 

  • Koutroumpis P. (2009) The economic impact of broadband on growth: A simultaneous approach. Telecommunications Policy 33(9): 471–485

    Article  Google Scholar 

  • Lee, S., & Marcu, M. (2007). An empirical analysis of fixed and mobile broadband diffusion. Working paper.

  • Madden G., Simpson M. (1997) Residential broadband subscription demand: An econometric analysis of Australian choice experiment data. Applied Economics 29: 1073–1078

    Article  Google Scholar 

  • Munnell A. H. (1992) Policy watch: Infrastructure investment and economic growth. The Journal of Economic Perspectives 6(4): 189–198

    Article  Google Scholar 

  • Newberry D. (1999) Privatisation, restructuring and regulation of network utilities. MIT Press, Cambridge

    Google Scholar 

  • OECD. (2008). OECD policy guidance on convergence and next generation networks. June.

  • Pindyck, R. S. (2003). Mandatory unbundling and irreversible investment in telecom networks. NBER working paper No. W10287.

  • Poel, M. (2006). Regulation of the local loop in the Netherlands. In P. Baake & B. Preissl (Eds.), Local loop unbundling and bitstream access: Regulatory practice in Europe and the US. Politikberatung kompakt 20, DIW Berlin.

  • Prieger, J. E., & Lee, S. (2007). Regulation and the deployment of broadband. In Y. K. Dwivedi et al. (Eds.), Handbook of research on global diffusion of broadband data transmission.

  • Rappoport, P. N., & Kridel, D. J., et al. (2003). Residential demand for access to the internet. Emerging telecommunications networks. In G. Madden (Eds.), The international handbook of telecommunications economics (Vol. 2, pp. 55–72). Cheltenham, UK: Edward Elgar.

  • Röller L., Waverman L. (2001) Telecommunications infrastructure and economic development: A simultaneous approach. The American Economic Review 91(4): 909–923

    Article  Google Scholar 

  • Rood H., te Velde R. A. (2003) Investment strategies in the Netherlands. Telecommunications Policy 27(10–11): 701–715

    Article  Google Scholar 

  • Stock, J. H., & Yogo, M. (2005). Testing for weak instruments in linear IV regression. In: D. W. K Andrews., & J. H. Stock, Identification and inference for econometric models: essays in honor of Thomas Rothenberg. Cambridge: Cambridge University Press.

  • Thompson G., Garbacz C. (2011) Economic impacts of mobile versus fixed broadband. Telecommunications Policy 35(11): 999–1009

    Article  Google Scholar 

  • Wallsten, S. (2006). Broadband and unbundling regulations in OECD countries. AEI-Brookings Joint Center Working Paper No. 06-16. Available at SSRN: http://ssrn.com/abstract=906865 or http://dx.doi.org/10.2139/ssrn.906865.

  • Waverman L., Koutroumpis P. (2011) Benchmarking telecommunications regulatory governance: The telecommunication regulatory governance index. Telecommunications Policy 34: 450–468

    Article  Google Scholar 

  • WIK. (2010). Architectures and competitive models in fibre networks. WIK Consult, Bad Honnef, consulted on 18.07.2011 at http://www.vodafone.com/content/dam/vodafone/about/public_policy/position_papers/vodafone_report_final_wkconsult.pdf.

  • Winston C. (1993) Economic deregulation: Days of reckoning for microeconomists. Journal of Economic Literature 31(3): 1263–1289

    Google Scholar 

  • Woroch, G. (2002) The race toward broadband. MSU-DLC Review of Law 3.

Download references

Author information

Authors and Affiliations

  1. European Investment Bank, 100, Boulevard K. Adenauer, 2950, Luxembourg, Luxembourg

    Harald Gruber

  2. Imperial College Business School, South Kensington Campus, SW7 4AZ, London, UK

    Pantelis Koutroumpis

Authors
  1. Harald Gruber
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Pantelis Koutroumpis
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Pantelis Koutroumpis.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Gruber, H., Koutroumpis, P. Competition enhancing regulation and diffusion of innovation: the case of broadband networks. J Regul Econ 43, 168–195 (2013). https://doi.org/10.1007/s11149-012-9205-4

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11149-012-9205-4

Keywords

JEL Classification

Search

Navigation