Geographically segmented regulation of telecommunications

Regulatory authorities in most OECD countries have traditionally adopted a national geographic area focus when framing the geographic scope of telecommunications markets. Arguments stemming from market analysis economics suggest that differential regulation be considered between geographic areas where facility-based competition has developed and where it has not.

The aim of this paper is to appraise the case for, and developments in, the use of sub-national geographically segmented regulation for fixed telecommunications networks. Uncertainty over the implications of Next Generation Access (NGA) should be taken into account when considering the effects of geographically segmented regulation. Such investment may change market power. In particular, market power could change depending on the network configuration used in rolling-out fibre to the home. This suggests that, where possible, it might be sensible for regulators to be cautious and to take into account NGA deployment before deciding whether to install geographically segmented regulation.