Deregulation in Europe

Thu Feb 02 15:24:38 EST 2006
By Nigel Attenborough and former NERA Consultant Dr. Federico Mini with Uli Prommer and Mathias Wengeler of Mercer Management Consulting

Deutsche Telekom is one of several European telecommunications companies interested in upgrading their networks to VDSL (very high bit-rate DSL) in order to accelerate Internet access to speeds 25 to 50 times faster than current ADSL technology and to significantly improve upload capacity. Due to the enormous economic potential of the VDSL market, the German federal government and regulatory authority are in favor of leaving new broadband services unregulated. However, while German authorities want to postpone a decision on the necessary level of regulation until data on concrete experiences with the market and competitive structures are available for review, the European Commission insists on regulating new broadband networks immediately.

Deutsche Telekom commissioned NERA and sister company Mercer Management Consulting to examine the case for deregulation of certain telecommunications markets in Europe and to assess the potential benefits that would result. The team, led by NERA Special Consultant Nigel Attenborough, presents a comparison of regulation in the US with the EU and quantify the possible economic effects of broadband market deregulation under two different scenarios. The authors conclude that the deregulation of the broadband market would indeed provide significant economic benefits: in Germany alone, deregulation could create 59,000 new jobs and boost national income by 0.2 percent over each of the next three years.