Modalities of Deployment of Telecommunications Infrastructure

Abstract

This study is aimed at investigating the firm’s decisions about the degree of quality improvements for advanced technology services when other approaches to infrastructure deployment, especially co-investment, act as alternative ways to launch new services. The model developed in this study considers the asymmetry of firms. This study shows that co-investment results in greater consumer welfare than fully distributed cost regulation, even though investment levels in quality improvements are lower. However, compared to individual investment, co-investment produces a deterioration in quality improvements when infrastructure sharing induces a considerable amount of incremental costs. The regulator should monitor co-investment agreements to avoid situations of tacit collusion especially when firms exhibit cost asymmetry in the deployment of advanced technology.