Watch: Media Plurality Discussion

This is the recording of CCP’s Media Plurality event (in conjunction with the CBA) which took place in London on 23rd May 2012.

The video is around 50 minutes long and has been edited for watchability. Many thanks to Michael Harker for making it available.

Policy Brief: Effect of Regulatory Reform on the Efficiency of Mobile Telecommunications

BACKGROUND

Regulatory reform of the mobile telecommunications sector has been introduced in recent years to improve productivity and competitiveness.

Non-parametric Data Envelopment Analysis (DEA) and parametric Stochastic Frontier Analysis (SFA) have often been presented as competing methodologies since they use different procedures to define the efficient frontier. The debate on the robustness of these two performance measurements is receiving growing academic attention.

METHODOLOGY

  • The authors examine the effect of different aspects of reform on productivity and its constituent parts in the mobile telecommunications sector.
  • The study focuses on the performance of 22 mobile network providers from seven countries over the period 1998-2007.
  • The authors exploit the difference between competing methodologies to add robustness to conclusions. The results of a stochastic production frontier function approach and a data envelopment analysis methodology are compared in order to address some of the criticisms which have been levelled at each methodology.
  • All the estimated measures of efficiency, total factor productivity change, efficiency catch-up and technological innovation under the two approaches are further analysed econometrically in relation to the impact of mobile sector reforms.

KEY FINDINGS

  • The authors find robust evidence that competition and independent regulation improve firm efficiency.
  • The results of the analysis imply that it is not necessary for firms to be privatised to be more technically efficient. But privatised firms are more capable of enhancing their total factor productivity growth, efficiency catch-up, and technological innovation in the production process in a shorter time period compared to their public counterparts.
  • Comparison of DEA and SFA results suggests that the measures of efficiency and total factor productivity are somewhat sensitive to the choice of methodology. To be confident in the outcomes of analyses, comparisons of performance across decision-making units (and years) need to be checked for robustness using different methodologies.

POLICY ISSUES

The most robust finding of the study is the positive effect of competition on both levels and growth in firm efficiency. This finding has profound implications for the design of markets. In an area which is sensitive both from a political and business perspective, governments and regulators should encourage active rivalry between four or five firms. However, extending such competition to more entrants may have little, or negative, impact on the productivity of the participants.

ABOUT THE AUTHORS

Yan Li is a Lecturer in Strategic Management in Norwich Business School, Catherine Waddams is a Professor of Regulation in Norwich Business School.

The original Policy Briefing is available for download here, the Working Paper on which it is based is available here.

Over on the other blog…

We are busy putting our thoughts in order to respond to BIS’s consultation on private actions in competition law – a consultation on options for reform.

Andreas Stephan’s post “An Unpopular Solution to the Private Enforcement Problem” has been up a few days, Peter Whelan has just added “The Passing-on Defence Should be Recognised in Legislation“.

We’ll post here when the response is completed, together with a link to the document(s).

Media Plurality – first look

The esteemed panel from Wednesday night’s discussion on Media Plurality in Westminster Hall, London. The panel (shown above) are (L-R) James Heath, Chris Goodall, Shaun Hargreaves Heap (chair), Charles Clarke and Peter Preston.

Summer’s Research Bulletin is here

The Summer 2012 edition of our Research Bulletin is now available for download here (those of you expecting postal copies will receive them in due course). The articles are:

Article 7 ECHR and the UK Cartel Offence (Dr Peter Whelan)

Choice in Private Healthcare (Professor Morten Hviid)

Grand Designs (Dr Stephen Greasley)

Application of Article 101(3): Addressing the Grey Area (Dr Oles Andriychuk)

If you would like to have a copy sent to you or be added to the CCP’s distribution list please email ccp@uea.ac.uk with your request or use the contact form.

What Do Public and Private Sanctions in Competition Policy Actually Achieve?

14th and 15th June sees CCP’s Annual Conference take place at UEA.

This year we are in plush new surroundings in the Thomas Paine Study Centre, home to Norwich Business School.  We are bringing together experts from the USA, Australia and Europe to discuss these developments from an economic, legal and political science perspective.

The speakers will provide a framework for appraising at the effects and achievements of public and private sanctions in the UK and the EU. Topics include the current approach to cartel sanctions, leniency and the interplay of public and private enforcement. In addition, the conference seeks to stimulate the discussion about the ongoing consultation on private antitrust enforcement in the UK.

The conference dinner this year is being held in Blackfriars’ Hall in Norwich. Accommodation is available in the City near the venue and a coach will take delegates back up to UEA the morning after.

You can book here.

Book Launch (review of 3rd May 2012)

Dr Pinar Akman launched her first book “The Concept of Abuse in EU Competition Law: Law and Economic Approaches” on 3rd May 2012 at the Great Hall, Lincoln’s Inn, London.

She gave a short speech on “Some new thinking on the EU prohibition of abuse of dominance” which was be followed by a panel discussion led by Thomas Sharpe QC and featured Peter Freeman CBE QC.

If you are interested in the book, please contact the publisher, Hart. The full set of photos can be viewed in CCP’s picasa album. Thanks to Sven Gallasch for taking the pics.

New Working Paper: Local Loop Unbundling

Richard Cadman, a part-time PhD student at the Centre, has published a new working paper (12-8) on the topic of Local Loop Unbundling in the UK:

A “reference offer” for Local Loop Unbundling was first published in the UK in December 2000, but by the end of 2005 just 2% of competitive copper access lines used LLU, compared with 56% in France. In 2005 Ofcom, introduced policy changes to commercialise LLU, which has increased to around 70% of competitive copper access lines. This paper measures the impact of Ofcom’s policy changes and concludes that these policy changes induced both the innovation and diffusion of LLU. The paper concludes that it is insufficient for regulators simply to mandate access: they must also ensure commercially attractive, non-discriminatory terms.

You can download the paper here.

The 2012 series of working papers is here.

New Working Paper: US Telecoms

Authored by CCP member Yan Li and Russell Pitman (Antitrust Division, US Department of Justice and New Economic School, Moscow), this new working paper (12-7 in the series) looks at the proposed merger of AT & T and T-mobile:

From the beginning, the debate on the likely results of the proposed acquisition of T-Mobile USA by AT&T focused more on the claims of the parties that “immense” merger efficiencies would overwhelm any apparent losses of competition than on the presence or absence of those losses, and the factors that might affect them, such as market definition. The companies based their “economic model” of the merger on estimates of efficiencies on AT&T‟s “engineering model”, without addressing the credibility of the results of the latter in the context of the economics literature on the telecommunications sector. In this paper we first argue that the economics literature on economies of scale (especially) and economies of density in mobile telephony suggests caution in expecting such massive cost reductions from increasing the size of an already very large firm. We then present new econometric evidence from an international data base supporting the notion that most large mobile telephone service providers have reached the point of constant or even (rarely) declining returns to scale.

Download the paper here.

The full 2012 series of Working Papers is here.

Response to Ofcom Consultation

Morten Hviid and Daithi Mac Sithigh have responsed to the Ofcom consultation ‘Consumer Switching – A consultation on proposals to change the process for switching fixed voice and broadband providers on the openreach copper network’.

View their full response here.