Functional Separation: Next Step of Improving Broadband Competition?

The issue of functional separation is being debated as a new proposal fortelecommunications regulatory framework in the EU. Although this issue has been discussed andimplemented in many countries, each country may not have the same procedure and outcome.This paper will therefore provide theoretical considerations of functional separation by starting fromthe idea of vertical integration. Pros and cons of implementing functional separation will also beprovided. The paper will present the evolution and development in the Swedish market, in particulardiscussion during the legislative process of proposing mandatory functional separation as one ofthe powers of the Swedish telecommunications regulator. The paper concludes with a discussion ofthe implementation of functional separation in general and in the Swedish broadband market, withimplications for other countries