Edited by Anastassios Gentzoglanis and Anders Henten
Chapter 1: Investment in Broadband Technologies and the Role of Regulation
1. Investment in broadband technologies and the role of regulation1 Anastassios Gentzoglanis and Elias Aravantinos INTRODUCTION 1.1 In the two decades from the mid-1980s to the mid-2000s network industries have undergone dramatic changes in structure and regulation. The thrusting changes have initially occurred in the technologies used by these industries to produce, transmit and distribute essential services to consumers. Technological changes have not uniformly affected all segments of the production processes. Few segments still remain natural monopolies while others are more suitable for competition. This uneven impact of technological changes on the cost functions has created new challenges to regulators and the industry. Both still strive to find a ‘new’ business model and new regulatory frameworks which will allow more investment in infrastructure in general and in broadband (BB) technologies in particular. Some countries have applied ‘light-handed’ regulation while some others have even decided to go further and liberalize entirely a few segments of the telecommunications industry by introducing full competition while keeping others under a regulated monopoly regime. The latter was generally applied to the incumbent while new entrants enjoyed more favorable entry and access regimes. The duality created by this type of regulation has sparked a heated debate as to what is the ‘appropriate role’ of regulation and its impact on investment and innovation.2 The main issues concern the capacity of the regulatory agencies to promote investment in infrastructure, especially in broadband technologies, and what are the best mechanisms to increase consumer choice at reasonable prices. This debate...
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