Evidence for a Ladder of Investment in Central and Eastern European countries

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: The model of liberalisation of European telecommunications markets had followed what has become known as the "ladder of investment" (LoI) hypothesis: under this hypothesis entrants are expected to make progressively greater investments in their own networks, whilst decreasing their dependence on the network of the incumbent fixed operator. The ultimate goal of the LoI approach is to achieve, where feasible, inter-platform competition. Terms of use: Documents inFrom a theoretical perspective, there are opposing forces at work: whilst offering retail services based on access to the incumbent's network at the 'first rung' of the ladder is less risky, access seekers may find that investing to step-up on the 'second and higher rungs' of the ladder too risky. It is therefore unclear from a theoretical perspective whether the LoI approach will lead to inter-platform competition.Whether and under what circumstances it would is thus an empirical question.Our paper focuses on the evidence for the LoI in Central and Eastern European (CEE) countries. Our analysis shows that the evidence available for CEE is consistent with entrants in CEE countries largely by-passing the LoI, by directly investing in their own networks. There are good reasons for this, as some of the assumptions underlying the LoI theory, such as good quality and universally available copper networks and relatively high cost and risk of investing in alternative infrastructure, do not necessarily hold in CEE countries. Our paper's results are broadly consistent with most of the existing literature and represents a valuable contribution by providing an insight into the applicability of the LoI to CEE countries.

The Russian Telecommunications Experience: a Positive Outcome of the Competitive Order in the Industry

“…However, not all territories that have been able to facilitate development of fiber-optic networks relied on governmental aid, and, moreover, the population density, which has a significant impact on the deployment of FTTx infrastructure, of the east of Europe is noticeably lower than the population density of the Asian frontrunners. Serdarević et al (2016) expose dissimilarity of telecommunications development in Western European countries and Central and Eastern European (CEE) 6 countries of the EU and clarify why newcomers of telecommunications markets in CEE countries were able to invest in their own networks without reliance on the incumbents' facilities. The examination of the Bulgarian case by Rood (2010) contributes to the explanation of the superiority of FTTx development of some of the Eastern European countries compared with the more economically developed parts of the EU and points out Besthetical policies^as one of the reasons Bwhy Europe trails other countries in new infrastructure roll out.T he results of these studies of the Eastern European cases correspond with some of the features of the evolution of telecommunications in Russia: the rollout of FTTx networks through the aerial deployment of fiber-optic cables, the underdevelopment of the incumbents' infrastructure at the moment of the start of the reform accompanied by the shortage or even lack of cable TVoperators in the markets and the high unsatisfied demand.…”

Deregulation of European Telecommunications: The Role of Private Interests

“…Уже после завершения активной фазы «либерализации» отрасли многие исследователи применяемых подходов в постдерегулированном регулировании телекоммуникаций стали обращать внимание на то, что ключевые показатели сектора в наиболее развитых странах Европы оказались гораздо хуже, чем в некоторых странах Восточной Европы [Lemstra, Melody, 2014;Rood, 2010;Serdarević et al, 2016]. Особенно парадоксальным выглядит показатель развития оптоволоконных сетей связи, даже несмотря на то что европейские разработчики политики обозначили его в качестве одного из приоритетных ориентиров.…”

“…Это пытались объяснить, указывая как на некоторые ошибки в применяемых методах регулирования [Serdarević et al, 2016], так и на экономическую отсталость посткоммунистических территорий, которая создавала преимущества для бедных стран перед богатыми [Briglauer, Gugler, 2013]. Не вступая в дискуссию о подобных теориях, стоит отметить, что они не предлагают альтернативы вышеизложенным представлениям о том, что конкуренцию необходимо развивать при помощи запретов и ограничений.…”

“…Многие современные исследователи указывают на определенные ошибки в европейском подходе [Briglauer, Gugler, 2013;Serdarević et al, 2016;Yoo, 2014], но с точки зрения теории общественного выбора можно утверждать, что эти «просчеты» являются следствием стремления отдельных индивидов к достижению собственных целей, которые часто не совпадают с официально заявленными намерениями 18 .…”

Regulation of Telecommunications: The Choice Between Market and Regulatory Failures

“…The current situation in the European market speaks in favor of this claim: the big companies from the advanced European economies have managed to take control over the industry in many less developed parts of the continent 2 , but it does not mean that small European countries were unable to develop the industry without such aid. The recent studies show that some Central and Eastern European countries not only demonstrated the higher level of competition and the presence of small and medium-sized enterprises in the industry during the first decade of the XXI century, but also have been able to leapfrog the most advanced economies of the EU in the development of fiber-optic infrastructure (Lemstra & Melody, 2014;Serdarević et al, 2016;Rood, 2010).…”