Regulation and Investment in Next Generation Access Networks: Recent Evidence from the European Member States

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Fiber-deployment of future telecommunications networks ("Next Generation Access" - NGA) is
currently a major challenge for sector-specific regulators as well as for investing firms. Although the
future socio-economic importance of new telecommunications networks is uncontroversial, the related
investment activities vary substantially in international comparison.
This work intends to identify the most important determinants of previous NGA deployment using
data from the EU27 member states for the years 2005 to 2010. For our analysis, we employ latest data
on NGA deployment, relevant competition and regulatory indicators as well as other supply and
demand side controls. Our econometric model incorporates: i) aggregated country level data; ii)
structurally modeled dynamics of the deployment process which allows us to disentangle long-term
and short-term effects; finally, iii) we argue that there is no endogeneity problem with respect to
investment activities and regulation since we refer to regulation in preceding broadband markets. For
our econometric analysis, we employ several dynamic panel data methods, such as GMM and
Our results indicate that stricter previous broadband access regulation has a negative impact on NGA
deployment. As regards the dynamics of the adjustment process, we find that there are severe
adjustment costs and stickiness towards the desired long-term level of NGA infrastructure. (author's abstract)


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