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Estimating the impact of co-investment on Fiber to the Home adoption and competition

Louise Aimene, Marc Lebourges and Julienne Liang

Telecommunications Policy, 2021, vol. 45, issue 10

Abstract: The demand for faster broadband access is a key driver of FTTH adoption and fixed broadband competition, and therefore of co-investment. This paper assesses the effects on FTTH adoption and competition of FTTH co-investment. Co-investment had indeed been endorsed in the European Electronic Communication Code as a relevant option for conciliating investment and competition. This paper contributes to evaluating this policy option by providing detailed empirical estimates of the influence of co-investment on Fiber to the Home (FTTH) adoption and competition in the French fixed broadband market. We combine several French municipality level datasets and use a two-stage control-function approach to correct for the endogeneity of investor entry. We show that the presence of co-investment leads to an increase of 7.9% in FTTH adoption in 2018. Co-investment offers also enhance competition. Co-investment by competitors causes a decrease in Orange, French incumbent operator, total retail broadband market penetration by 5.9% whereas no co-investment by competitors lets Orange’s total retail broadband market penetration unchanged. Our findings confirm that co-investment supports the policy objectives of adoption and competition and should be supported by regulation.

Keywords: Entry model; FTTH coverage; FTTH adoption; Competition; Co-investment (search for similar items in EconPapers)
JEL-codes: L43 L51 L96 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.telpol.2021.102139

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