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Promoting the Buildout of New Networks vs. Compelling Access to the Monopoly Loop: A Clash of Regulatory Paradigms

Christopher S. Yoo
법학연구소 (The Institute of Legal Studies Konkuk University)|2011.05|경제규제와 법|제4권 제1호|pp. 7-32

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vertical integrationtelecommunicationsrate regulationbroadbandinvestment incentives
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초록

Telecommunications policymakers and commentators have long debated whether regulators should mandate access to existing facilities or instead promote incentives to invest in new network capacity by denying such access. After reviewing the history of mandating access to local telephone networks and last-mile broadband networks in the United States, this article reviews how mandating access to existing facilities necessarily embroils regulators with the troublesome problems associated with rate regulation, prevents firms from realizing the efficiencies associated with vertical integration, and impedes the emergence of competition by dampening both incumbents’and new entrants’incentives to make new investments in alternative network capacity. Empirical scholarship studying this issue also largely supports focusing on stimulating facilities-based competition instead of relying on access regulation to mandate sharing of the monopoly loop.

Abstract

Telecommunications policymakers and commentators have long debated whether regulators should mandate access to existing facilities or instead promote incentives to invest in new network capacity by denying such access. After reviewing the history of mandating access to local telephone networks and last-mile broadband networks in the United States, this article reviews how mandating access to existing facilities necessarily embroils regulators with the troublesome problems associated with rate regulation, prevents firms from realizing the efficiencies associated with vertical integration, and impedes the emergence of competition by dampening both incumbents’and new entrants’incentives to make new investments in alternative network capacity. Empirical scholarship studying this issue also largely supports focusing on stimulating facilities-based competition instead of relying on access regulation to mandate sharing of the monopoly loop.

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