Quotation Briglauer, Wolfgang, Vogelsang, Ingo. 2011. The Need for a New Approach to Regulating Fixed Networks. Telecommunications Policy 35 (2): 102-114.


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Abstract

The increasing danger of excess capacity in the regulated fixed networks calls into question the established long-standing pricing standards for wholesale services based on forward-looking long-run incremental costs (FL-LRAIC). Within the EU Regulatory Framework for Electronic Communications and Services, the FL-LRAIC standard has worked quite well in expanding markets, although even there price-squeeze problems have appeared. In contracting markets the price-squeeze issue, however, becomes paramount and lower prices both at the wholesale and retail levels would be efficient. Because both expansion and contraction could be relevant in the future, this paper suggests an optional approach based on the wholesale price formula p=min{FL-LRAIC, Retail-Minus} with an optional replacement of per-minute charges by capacity-based access charges (CBC). This will generally protect alternative competitors against price-squeeze while at the same time allowing the fixed-network incumbent full downward price flexibility. It also protects alternative competitors and end users against excessively high prices.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Telecommunications Policy
Citation Index SSCI
WU-Journal-Rating new STRAT-C, VW-D
Language English
Title The Need for a New Approach to Regulating Fixed Networks
Volume 35
Number 2
Year 2011
Page from 102
Page to 114
Reviewed? Y

Associations

People
Briglauer, Wolfgang (Details)
External
Vogelsang, Ingo (Boston University, United States/USA)
Organization
Research Institute for Regulatory Economics FI (Details)
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