‘Unbundling the incumbent: Evidence from UK broadband’
September 18, 2013 Leave a comment
On Friday 20th September, the CCP Seminar Series returns for the Autumn semester with another interdisciplinary line-up of presentations on competition policy and regulation.
To officially open proceedings, we are delighted to welcome Professor Tommaso Valletti (Imperial College London) who will be presenting his article on ‘Unbundling the incumbent: Evidence from UK broadband‘ which he has written with Mattia Nardotto (University of Cologne) and Frank Verboven (University of Leuven). An abstract for his seminar can be found below.
We consider the impact of a regulatory process forcing an incumbent telecom operator to make its local broadband network available to other companies (local loop unbundling, or LLU). Entrants are then able to upgrade their individual lines and offer Internet services directly to customers. Employing a very detailed dataset covering the whole of the UK, we find that over the course of time, many entrants have begun to take advantage of LLU. However, unbundling has little or no effect on broadband penetration, compared to those areas where the loops are not unbundled. LLU entry instead has a strongly positive impact on the quality of the service provided, as entrants successfully differentiate their products upwards compared to the incumbent. We also assess the impact of competition from an alternative form of technology (cable) which is not subject to regulation, and what we discover is that inter-platform competition has a positive impact on both penetration and quality.
For further information on the CCP Seminar Series, including a programme of speakers for this semester, visit our website.