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Economia e Politica Industriale

, Volume 45, Issue 2, pp 243–278 | Cite as

Dark fiber price regulation in the absence of facilities-based competition

Article
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Abstract

Contrary to copper, fiber is a segmented vital input. This means that, even though a National Regulatory Authority may regulate active fiber, the owner of the fiber network infrastructure may distort retail competition and obtain a sufficiently high wholesale revenue through the sale of dark fiber if this is not subject to regulatory intervention. Given the recent trend in favor of access price regulation of dark fiber in Europe, the analysis evaluates which wholesale price control method should be applied considering that the market structure of the telecommunications industry is the monopolistic bottleneck. Three regulatory options are tested against each other: active-minus regulation, cost-based regulation applied to both layers of the segmented vital input and equivalence of inputs. The imposition of active-minus regulation improves investment incentives and social welfare compared to the alternative methods.

Keywords

Vertical integration Dark fiber Active fiber Wholesale price discrimination Active-minus Equivalence of inputs 

JEL Classification

L11 L13 L51 L96 

Notes

Acknowledgements

The work was supported by ANACOM through Post-Doctoral Grant ref. 02 2014 DAC-AE. The views expressed in the paper are exclusively of the author, thus, not representing the view of ANACOM or BEREC. Vitor Miguel Ribeiro appreciates the valuable comments and discussions provided by two anonymous referees and the suggestions made by the Editor-in-Chief Carlo Cambini. These have drastically improved the quality of the manuscript, hence, my immeasurable gratitude goes to you. Finally, no conflict of interest is declared by the author.

Supplementary material

40812_2017_75_MOESM1_ESM.pdf (415 kb)
Supplementary material 1 (PDF 415 kb)

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Copyright information

© Associazione Amici di Economia e Politica Industriale 2017

Authors and Affiliations

  1. 1.ANACOM, Autoridade Nacional de ComunicaçõesLisbonPortugal
  2. 2.Universidade de AveiroAveiroPortugal

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