Tuesday, June 18, 2013

Study - Reports claims significant adverse effects of local loop unbundling on EU broadband and productivity performance

At an ITIF seminar in Washington DC, Copenhagen Economics presented its report "Europe can catch up with the US: A contrast of two contrary [sic] broadband models" by Martin Thelle and Bruno Basalisco:
... the US and EU took two different broadband policy paths since the late Nineties: the former focused on infrastructure-based competition; the latter focused on service-based competition via broadband unbundling.

Several European fixed telecom incumbents have refrained from investing aggressive-ly in next generation access networks due to regulation affecting the business case for fiber investments.

Furthermore, unbundling has contributed to keep prices so low in the EU that a creeping investment malaise has resulted. A decade later, per capita investment in telecommunications networks in the US is more than 50% higher than in the EU (US$ 197 to US$ 129 in 2009).

In turn, total ICT investments in the US were more than double than in the EU, which contributes to explain the productivity gap between the EU and the higher productivi-ty US. Had the US followed the EU's slower pace in ICT investments since the late 1990s, US labour productivity growth would have been 25-30 % lower than it is today.

The US industrial structure of widespread inter-platform competition, the result of past regulatory choices, implies that the US is justified today in staying the course and maintain a lighter regulatory policy for fixed telecoms

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