Vertical separation of telecommunications networks: Evidence from 5 countries

Vertical separation of telecommunications networks: Evidence from 5 countries

Download PDF
Abstract:
   
The widespread adoption of mandatory unbundling in telecommunications markets has led to growing interest in mandatory “functional separation” i.e., separation of upstream network operations from downstream retail operations. Since 2002, vertical separation has been implemented in five OECD countries: Australia, Italy, New Zealand, Sweden, and the United Kingdom. In 2008, the International Telecommunications Union noted “a tremendous amount of interest” in functional separation around the world; and, in April 2009, the European Parliament held its second reading on a new regulatory framework that embraces functional separation as an “exceptional measure.” While the U.S. does not currently require unbundling of broadband telecommunications networks, at least one influential group is advocating both unbundling and vertical separation for U.S. network operators. In this context, this study examines mandatory vertical separation in telecommunications markets from both a theoretical and an empirical perspective. The theoretical case against vertical separation is very strong, predicting in particular that mandated separation will discourage innovation and investment in new technologies. The empirical evidence tends to confirm these predictions, suggesting that overall, vertical separation is likely to impose significant costs without measurably increasing broadband penetration.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Jeffrey
Eisenach

What's new on AEI

To secure southern border, US must lead international effort to stabilize Central America
image The Ryan pro-work, anti-poverty plan: Thomas Aquinas 1, Ayn Rand 0
image Does SNAP support work? Yes and no
image Obama Democrats lose their big bet on health exchanges
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.