Concurrentie en regelgeving in de telecommunicatiemarkt

It is, for instance, beneficial for the functioning of the market to base the incumbent's terminating access fees on underlying costs. Conversely, a temporary markup in entrants' terminating access fees may stimulate entry in the market for fixed telephony. During the transition to more effective competition, such a markup is also in the interests of consumers.

These are some of the conclusions drawn by CPB Netherlands Bureau for Economic Policy Analysis in the report 'Competition and Regulation in Telecommunications Markets', published today. Opta, the independent post and telecommunications authority in the Netherlands, has asked CPB to analyse the effects of regulation on entrants and end-users. The background of the study is that in several market segments, e.g. the market for fixed local telephony, the incumbent KPN Telecom is still dominant. Large corporate customers, especially in large cities, are able to use networks built by competitors, but residential consumers often have less or no choice. Therefore, regulation is still necessary. Using applied game theory, the effects of regulatory instruments on strategic interaction between an ex-monopolist and several types of entrants (with and without their own networks to connect end-users) are analysed in the study.

Other conclusions are the following. Generally, regulation can be directed at either services competition or infrastructures competition. An example is regulation of the originating access fee, i.e. the price that Carrier (Pre)Select entrants have to pay to the incumbent to generate traffic on its network. Carrier (Pre)Select means that a consumer makes a call via an entrant, by dialling or presetting a four-digit code. A cost-based originating access fee is beneficial for the cost level of Carrier (Pre)Select operators and hence stimulates services competition. Cost-based fees reduce the risk that entrants are squeezed between the wholesale fees they have to pay to the incumbent and the prices they can charge their customers ("price squeeze"). Conversely, a higher fee increases the cost level of Carrier (Pre)Select entrants and creates stronger incentives to build local networks, for it is then more attractive for entrants to connect end-users themselves. By gradually increasing an initially cost-based fee, it becomes possible to stimulate services competition in the early phase of liberalisation, and make infrastructures competition more attractive for entrants at a later stage. This principle also applies to unbundled access to the local loop (entrants lease the incumbent's copper wires between end-users and local switches). A lower, respectively higher line rental stimulates services, respectively infrastructures competition.

The study demonstrates that in segments where the incumbent is dominant, retail price cap regulation is usually a necessary evil. On the one hand, price caps that are too low, make entry less profitable. On the other hand, price caps that are too high are ineffective: retail prices remain too high and the incumbent has less incentives to increase its efficiency. Therefore, price caps need to be balanced carefully, which is difficult because of the imperfect information about operators' costs. Price caps can be withdrawn if entrants create sufficient downward pressure on retail prices.