تنظیم دسترسی به NGA-A مالی، راه حل منتج به بازار به منظور پر کردن شکاف بین آمریکا و اروپا با استفاده از واگرایی روش های نظارتی

How to regulate wholesale access on next generation access (NGA) networks is probably the most pressing issue faced by European telecoms regulars today. The lack of actual competitive restraint from cable operators precludes the replication of US-like regulatory forbearance, as it might lead to the (re-) monopolization of broadband markets by telecoms incumbents, thus spoiling the celebrated achievements over the last decade, whereby competing operators have penetrated the market thanks to widespread access regulation over the DSL platform. However, as NGA networks are largely yet to be deployed, the threat of similar measures being extended is keeping incumbents from undertaking investments into NGA. This is particularly so given the perceived uncertainty about consumers’ willingness to pay for next-generation Internet access services, which raises deep reservations about the viability of the business case for NGA. Such a stalemate is exacerbated by the difficulty of envisaging practical solutions to reach a “new regulatory contract”, where conflicting interests are effectively balanced out for the benefit of the society overall. This article represents an attempt to address this vacuum. A “division of labour” between regulators and the market is proposed, in order to reflect distinctive capabilities in an incentive-compatible way. In particular, while regulators would be responsible for setting wholesale access terms, the market would be left to price the risk in NGA deployment through the functioning of a commodity option market.

Regulatory-wise, the issue of next generation access (NGA) can be framed in terms of a friction between supply-side and demand-side prevailing conditions. From a supply-side perspective, the deployment of optical fibre closer to consumers’ premises would strengthen the importance of scale and scope economies, thus potentially leading to an enduring economic bottleneck.1 From a demand-side perspective, investors face uncertainty about consumers’ willingness to pay (WTP) for services that could be specifically delivered over upgraded access networks, while traditional sources of revenues are, and will increasingly be, commoditised and cannibalised.2 This friction is a challenge to European telecoms regulators. The conventional regulatory approach-focused on cost orientation, price control and service quality-evolved on a widely deployed infrastructure whose cost had been largely recovered, whereas NGA networks are yet to be deployed. In this respect, a new divide has emerged between US and EU regulatory approaches.3 In the former case, concerns about demand-side uncertainties and the degree of inter-platform competition-primarily from cable companies-led to a reshaping of the regulatory framework. The previous unbundling obligations on incumbent local-exchange carriers were eliminated, thus providing them with strong incentives to undertake widespread investment plans.4 On the other side of the Atlantic, supply-side concerns predominantly shaped regulators’ stance toward announced investment initiatives in NGA, in the view that intra-platform competition must be safeguarded to prevent retail monopolization by fixed incumbents. However, ex-ante regulatory intervention – or the threat of it – might spoil incentives to invest in NGA, as investors face the risk of asymmetric regulatory treatment where returns are (not) capped under (negative) positive scenarios. 5 At the same time, regulators are keen not to promote investment per se, which might turn out to be inefficiently too large or/and too fast. This tension is at the core of the European debate on regulatory principles of NGA and has so far precluded the development of effective and pragmatic solutions capable of balancing out the incentives for fixed incumbents with the interests of other stakeholders – notably, regulators and potential access seekers. This difficulty is witnessed by the current focus on potential remedies, which have been so far envisaged mainly in terms of promoting facility-based competition – that is, sub-loop unbundling and duct/facility sharing. This is at odds with the growing consensus that in an NGA environment the main competitive mode will take the form of either service-based competition (i.e., via bitstream access)6 or risk-sharing initiatives through cooperative arrangements.7 This article is aimed at addressing this vacuum by introducing a “division of labour” between regulators and the market in order to reflect distinctive capabilities in an incentive-compatible way. In short, regulators set the wholesale access price and the risk in NGA deployment is priced through the functioning of a commodity option market. This approach would also comply with the European Regulatory Framework for Electronic Communications (the Regulatory Framework), which prevents regulators from entering into contingent commitments over a long period of time.8 While the next section investigates the economic aspects of NGA deployment from both supply-side and demand-side perspectives, Section 3 explains the current regulatory impasse in light of the described economic conditions. Similarly, Section 4 presents and analyses the proposal advanced in this article as a solution to the described regulatory impasse. Section 5 concludes.

During a speech given at a conference hosted by the Dutch telecoms incumbent, KPN, in January 2008, the previous European Commissioner, Viviane Reading, stated that:89 How we treat next generation access is therefore the single most important policy question in the telecom sector today. We have to create incentives for investment whilst making sure that no-one (and I insist on this no-one), can be in a position to foreclose the market. What are the incentives to invest? The key is a stable and predictable regulatory environment. Investment decisions are finely balanced. If we are to encourage market players to invest in upgrades to the access networks, they will need to be able to offer a long-term return on investment to their investors (emphasis added). This passage is a compelling manifestation of the regulatory impasse described in Section 3. While European regulators recognize operators’ uneasiness to invest in NGA, their reliance on the paradigm applied in the last decade fails to unleash investors’ “animal spirits”.90 This proposal is an attempt to address this regulatory deadlock. The reconsideration of the original analogy between financial and real options suggests mimicking the functioning of a commodity option market as a solution to separate the task of regulating the (recurring) access terms from the issue of correctly pricing (rewarding) the entrepreneurial risk in the deployment of NGA investments. In doing so, regulators would remove the regulatory risk of undue appropriation, due to their unwillingness to enter into long term “contract” with investors. At the same time, COs are called to be part of the transition to NGA in a transparent way, thus being allowed to compete with the incumbent on an equal footing, while precluding opportunistic ex-post free-riding in case the transition was fulfilled successfully. Although the exposition in this article is focussed on NGA, this framework could be a valid proposition across other utilities, in particular, when a new challenge is posed by the presence of unconventional demand uncertainty in the face of substantial infrastructure investments.