Regulation and Investment in Next Generation Access Networks: Recent Evidence from the European Member States

Fibre-deployment of future telecommunications networks ("Next Generation Access" - NGA) is a major challenge for sector-specific regulators as well as for investing firms. Although the future socioeconomic importance of new telecommunications networks is uncontroversial, the related investment activities vary substantially in international comparison. This work identifies the most important determinants of NGA deployment, using data from the EU27 member states for the years 2005 to 2010. Our results indicate that stricter previous broadband access regulation has a negative impact on NGA deployment, while competitive pressure from broadband and mobile affects NGA deployment in an inverted U-shaped manner. We further find that there are severe adjustment costs and stickiness towards the desired long-term level of NGA infrastructure. It appears that the approach of the European Commission of strict cost-based access regulation will not elicit the huge new investment needed for a comprehensive NGA roll-out. (authors' abstract)Series: Working Papers / Research Institute for Regulatory Economic