New generation of networs, new generation of regulation?
As a consequence of digitalization of telephony and television, the upgrading of current networks to fiber optic networks and the spread of the Internet Protocol (IP), cable- and telephony networks are increasingly able to offer comparable services. If this development is sustained, in time competition will arise between two vertically integrated suppliers with comparable networks. This report contains an analysis of the required regulation of entry, retail prices and interconnection in such a scenario. Competition between vertically integrated service providers who own their networks creates incentives to provide access to these networks for service providers without networks and makes foreclosure less likely. If these incentives are sufficiently strong, access regulation can be reconsidered. From a long-term welfare perspective, it is therefore important that regulation aims at strengthening competition between networks. Symmetric regulation of access can play a role, even if one of the network providers has no considerable market power. Regulation of interconnection will also remain necessary in a converged market to prevent too high interconnection tariffs. Because of the very low costs for IP-based calls, bill-and-keep might be a simple and effective for of regulation.
This publication is in Dutch.