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Dark fiber price regulation in the absence of facilities-based competition

Vitor Miguel Ribeiro ()
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Vitor Miguel Ribeiro: ANACOM, Autoridade Nacional de Comunicações

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2018, vol. 45, issue 2, 243-278

Abstract: Abstract Contrary to copper, fiber is a segmented vital input. This means that, even though a National Regulatory Authority may regulate active fiber, the owner of the fiber network infrastructure may distort retail competition and obtain a sufficiently high wholesale revenue through the sale of dark fiber if this is not subject to regulatory intervention. Given the recent trend in favor of access price regulation of dark fiber in Europe, the analysis evaluates which wholesale price control method should be applied considering that the market structure of the telecommunications industry is the monopolistic bottleneck. Three regulatory options are tested against each other: active-minus regulation, cost-based regulation applied to both layers of the segmented vital input and equivalence of inputs. The imposition of active-minus regulation improves investment incentives and social welfare compared to the alternative methods.

Keywords: Vertical integration; Dark fiber; Active fiber; Wholesale price discrimination; Active-minus; Equivalence of inputs (search for similar items in EconPapers)
JEL-codes: L11 L13 L51 L96 (search for similar items in EconPapers)
Date: 2018
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Economia e Politica Industriale: Journal of Industrial and Business Economics is currently edited by C. Cambini, M.G. Colombo, L. Piscitello, L. Rondi and A. Zanfei

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Handle: RePEc:spr:epolin:v:45:y:2018:i:2:d:10.1007_s40812-017-0075-8