Saturday, May 19, 2007

New generation of networks, new generation of regulations?

In The Netherlands we have more than one digital network. The plain old telephone system is being upgraded and KPN hopes be able to start putting an All-IP network in place from next year onwards. The cable network has been upgraded and is delivering internet over coax at increasing speeds. And there is a digital network through the ether, Digitenne. The telecom and cable systems are converging toward each other, while the digital ether network is only for broadcast presently.

For the Netherlands Bureau for Economic Policy Analysis Bureau this was a reason to study the question whether a new generation of regulations is needed. Here is the abstract of the report (which is in the Dutch language): As a consequence of digitalization of telephony and television, the upgrading of current networks to fiber optic networks and the spread of the Internet Protocol (IP), cable- and telephony networks are increasingly able to offer comparable services. If this development is sustained, in time competition will arise between two vertically integrated suppliers with comparable networks. This report contains an analysis of the required regulation of entry, retail prices and interconnection in such a scenario. Competition between vertically integrated serviceproviders who own their networks creates incentives to provide access to these networks forservice providers without networks and makes foreclosure less likely. If these incentives aresufficiently strong, access regulation can be reconsidered. From a long-term welfare perspective, it is therefore important that regulation aims at strengthening competition between networks. Symmetric regulation of access can play a role, even if one of the network providershas no considerable market power. Regulation of interconnection will also remain necessary ina converged market to prevent too high interconnection tariffs. Because of the very low costsfor IP-based calls, bill-and-keep might be a simple and effective for of regulation.

Blog Posting Number: 758

Tags:, ,