1 / 8

Telco Structural Separation: The Road to Local Competition

This conference presentation discusses the benefits of structural separation in the telecommunications industry, focusing on the importance of divestiture for promoting local competition and addressing entry barriers. The options for divestiture are explored, including the creation of a separate subsidiary or the establishment of Link-Co and UNEP-Co. The potential impact on future networks, particularly in terms of private virtual channels (PVCs), is also discussed. Overall, structural remedies are seen as an effective alternative to conduct regulation when monopoly control is expected to be long-lived and discrimination problems are unlikely to be solved through regulation.

danielpjones
Download Presentation

Telco Structural Separation: The Road to Local Competition

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Telco Structural Separation: The Road to Local Competition Michael D. Pelcovits, MiCRA Phoenix Center, Annual U.S. Telecomms Conference November 20, 2002

  2. Regulation:The Road “More” Traveled • Economies of scale/sunk costs are significant for many network elements and present insuperable entry barriers • Intermodal competition will not be robust • Access to network elements requires detailed conduct regulation • Time for Divestiture II?

  3. Divestiture II - Guidelines • The greatest benefit comes from a complete divestiture - not a separate subsidiary • changes the incentives of the monopoly firm • Takes time to implement, so it must be a long-run solution • Must be robust with respect to technological change

  4. Today’s Network Transport Loop CLEC Network Interface Remote Terminal/SAI Circuit Switch Circuit Switch CLEC

  5. Divestiture Options: Today’s Network • Option #1: Link-Co: “connection between customer and carrier” • Allows Link-Co to provide muxing and transport • Adds EELs to old Loop-Co concept • Does not provide customer-to-customer connection • Option#2: UNEP-Co: Wholesale/Retail split

  6. ATM Network Future Network DSLAM/ATM switch connection may include SONET transport if ATM switch is not in local wire center Transport Loop ISP/CLEC ADSL terminal unit DSLAM ATM switch ATM switch (may be ATM concentrator) ISP/CLEC PRIVATE VIRTUAL CHANNEL

  7. Divestiture II - Future Network • Private Virtual Channels (“PVCs”) may become the most important monopoly element • subject to significant economies of scale • great potential for discrimination under currrent regulatory regime • Divestiture II should create Link-Co to provide PVCs and dedicated connections between customers and carriers (including ISPs)

  8. Conclusions • Structural remedies are an effective and powerful alternative to conduct regulation, and most appropriate where: • monopoly control over inputs can provide powerful leverage into important, dynamic downstream markets • monopoly control is expected to be long lived • discrimination problems cannot be solved through regulation

More Related