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Sunday, September 29 • 11:10am - 11:45am
A Unified Framework for Open Access Regulation of Telecommunications Infrastructure: Literature Review and Policy Guidelines

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The concept of Open Access (OA) plays a central role in the ongoing academic and political debate on the appropriate regulatory framework for next-generation access networks (NGAN). In particular, OA is believed to provide a balance between static and dynamic efficiency, i.e., between the stimulation of competition and the encouragement of investment. However, clear policy conclusions on the effect of OA regulation were usually precluded by a fundamental lack in common understanding what actually defines an OA policy and along which dimensions OA regulation can be structured. For example, while OA has been used by American scholars to describe access obligations including price regulation, the European Commission?s understanding of OA refers to mandated access in the case of state aid and on the other end network operators have put emphasis on voluntary access. Again, some definitions state the vertical separation of upstream and downstream activity as a prerequisite while others are explicitly concerned with the application in the case of vertically integrated access providers.
In this paper, we reconcile these diverse views, by offering an integrative, universal definition of OA that is based on the central principle of non-discrimination. Moreover, based on this definition, we develop a conceptual framework by which OA endeavors can be uniquely identified. This allows us to classify, compare, and benchmark different concepts of OA that are discussed in the extant literature. More specifically, our conceptual framework is structured along the following dimensions: (1) Vertical structure of the access provider, i.e., whether the access provider is active in the downstream market or may represent a cooperative of multiple firms, (2) Business model of the access provider, i.e., the ownership structure and goals of the organization, and (3) Access level, i.e., the degree of quality differentiation that the access seeker can exploit.

By classifying the various applications of the OA concept along these dimensions we are able to relate the implications of an OA regime to the surrounding environment and the properties of the particular access relationship. In particular, in the context of this framework we survey the extant literature with regard to aspects of consumer and total welfare (static efficiency), investment and innovation (dynamic efficiency), as well as practical and legal issues (regulatory requirements) and find systematic trade-offs and policy conclusions.

For example, in the case of public-sector participation we conclude that mandated OA represents an effective instrument to minimize the crowding-out effect when applied to low access levels such as ducts. Local initiatives can reduce the negative effects of the central planner paradigm underlying traditional public-sector participation and are able to achieve economies of scope, but exhibit an inherent lack of scale. In the case of private ownership and vertical separation there is a generally negative effect on the coordination of investments between upstream and downstream segment, but we argue that this may play a minor role in the NGAN context. In the case of vertical integration OA may serve as an instrument to abstain from price regulation and rely solely on a margin squeeze test. The impact on facility-based competition occurs to be ambiguous, since there is now a lower incentive to duplicate infrastructure, but wholesale competition may be encouraged. Cooperative investment approaches pose a new challenge by raising the question how OA should be granted along the temporal dimension (ex-ante vs. ex-post).

While the main focus of this paper is on access networks, we finally also discuss the potential extensions of the OA framework to higher layers of the value chain. In a market where network operators are now competing with IP-based service providers, innovation is driven by integrated hardware and software eco-systems, and service platforms may become new bottlenecks for complementary services, questions surrounding OA are likely to include the application to non-physical infrastructure in the future.

We look forward to have this proposal considered for the TCRP Main Conference, however we do not participate in the Poster session.

avatar for Karen Rose

Karen Rose

Internet Society
Karen has been active across Internet technology, policy, and development for nearly 20 years, including prior roles in Internet start-ups, government, and management consulting. She began her career in public policy working on Internet and e-commerce issues at the U.S. Federal Communications Commission. She later joined the National Telecommunications and Information Administration of the U.S. Department of Commerce where her work focused on the... Read More →

avatar for Daniel Schnurr

Daniel Schnurr

Karlsruhe Institute of Technology

Sunday September 29, 2013 11:10am - 11:45am
GMUSL Room 225

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