DOI QR코드

DOI QR Code

The Effects of the change in Telecommunication Regulation on Incentive for Network Investment and Innovation - Based on Korean Telecommunications Regulation Changes-

  • Published : 2012.07.01

Abstract

This paper analyzes the impact of the change in telecommunication regulation changes including the unification of telecommunication service on network investment. The unification of telecommunication service plays a role of separating behavior regulation from entrance regulation and reducing entrance constraints. Therefore, it is expected that the market spillover effect is high through the improvement of behavior regulation. In addition, the effects of the other regulation changes in the 2010 Telecommunications Business Act revision are analyzed. This paper discusses critical factors affecting the decision making process in respect to the firm level and analyzes the impact path guiding investment and innovation. The key findings are as follows. First, the impact of entrance deregulation depends on the intensity of deregulation. If the intensity is not high, this regulation increases the incentive on investment and innovation. However, if the intensity is high as shown in abolishing of licensing, it affects the incentive negatively. Second, if interconnection regulation focuses on existing facilities or the intensity is not strong, this light handed regulation might increase investment and innovation. However, if interconnection obligation is expanded to the facility not constructed or the facility applying new technology, this regulation might deteriorate investment. Third, price deregulation increases the competition of service but it also increases the business opportunity, which means positive effect on investment. Finally, the paper proposes the guideline for telecommunications policy.

Keywords

References

  1. Alleman, J. and Noam, E. (eds.) (1999) The new investment theory of real options and its implications for telecommunications economics, Boston, Dordrecht, London: Kluwer.
  2. Bauer, J.M. (2010) Regulation, public policy, and investment in communications infrastructure. Telecommunications Policy, 34, 65–79. https://doi.org/10.1016/j.telpol.2009.11.011
  3. Brandenburger, A.M. and Nalebuff, B.J. (1996) Coopetition, New York: Currency Doubleday.
  4. Chung, I. (2006) Broadband, the information society, and national systems: The Korean case, In M. Fransman (ed.), Global Broadband Battles: Why the US and Europe lag while Asia leads, Stanford, CA: Stanford University Press, 87-108.
  5. De Bijl, P. and Peitz, M. (2008) Innovation, convergence and the role of regulation in the Netherlands and beyond, Telecommunications Policy, 32, 744-754. https://doi.org/10.1016/j.telpol.2008.09.003
  6. Dixit, A. and Pindyck, R.S. (1995) The options approach to capital investment, Harvard Business Review, May-June, 105-115.
  7. Elixmann, D., Dragan, I., Neumann, K.H., and Pluckebaum, T. (2008) The economics of next-generation access. Bad Honnef, Germany: WIK-Consult.
  8. Eskelinen, H., Frank, L., and Hirvonen, T. (2008) Does strategy matter? A comparison of broadband rollout policies in Finland and Sweden, Telecommunications Policy, 32, 412-421. https://doi.org/10.1016/j.telpol.2008.04.001
  9. Farrell, J. and Weiser, P.J. (2003) Modularity, vertical integration, and open access policies: towards a convergence of antitrust and regulation in the internet age, Harvard Journal of Law and Technology, 17(1), 85-134
  10. Fransman, M. (2007) The New ICT ecosystem: Implications for Europe, Edinburgh: Kokoro.
  11. Gayle, P.G. and Weisman, D.L. (2007) Efficiency trade-offs in the design of competition policy for the telecommunications industry, Review of Network Economics, 6(3), 321-341.
  12. Ida, T. (2006) Broadband, information society, and the national system in Japan, In Fransman, M. (ed.), Global broadband battles: Why the US and Europe lag while Asia leads, Stanford, CA: Stanford University Press, 64-86.
  13. Pindyck, R.S. (2007) Mandatory unbundling and irreversible investment in telecom networks, Review of Network Economics, 6(3), 274-298.
  14. Prieger, J.E. (2002) Regulation, innovation, and the introduction of new telecommuni-cations services, Review of Economics and Statistics, 88(4), 704-715.
  15. Reardon, M. (2009) The price of broadband, CNET News, Retrieved October 12, 2009 from http://news.cnet.com/8301-30686_3-10364590-266.html?tag=mncol.
  16. Trigeorgis, L. (1996) Real options: managerial flexibility and strategy in resource allocation, MIT Press, Cambridge, Massachusetts.