The impact of different fibre access network technologies on cost, competition and welfare

Steffen Hoernig, Stephan Jay, Karl Heinz Neumann, Martin Peitz, Thomas Plückebaum, Ingo Vogelsang

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)

Abstract

Using a novel approach to the evaluation of new network technologies that combines an engineering cost model with a differentiated multi-player oligopoly model with wholesale access regulation this article evaluates the choice among different Fibre-to-the-Home (FTTH) architectures. The cost modelling relies upon an engineering bottom-up approach that feeds into a competition model. For addressing competition the pyramid model was chosen, which is an extension of the Hotelling model to multiple firms/services. The paper solves for price setting Nash equilibria between an incumbent, wholesale-access-based entrants and cable as an additional fully integrated network competitor. Welfare tradeoffs are highlighted with respect to cost differences and QoS differences between the various FTTH architectures and between the modes of regulation. According to the analysis architectures that can be unbundled (and that allow for greater speeds) outperform, from a social welfare perspective, architectures that (realistically) allow only for bitstream access.

Original languageEnglish
Pages (from-to)96-112
Number of pages17
JournalTelecommunications Policy
Volume36
Issue number2
DOIs
Publication statusPublished - Mar 2012

Keywords

  • Bitstream access
  • Cost modelling
  • FTTH
  • NGA
  • Unbundling
  • Welfare analysis

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