Symmetric Telecom Regulation, Competition and Investment

Symmetric telecoms regulation, where it is not only the operators with significant market power (SMP) at national or large geographical scales which are subject to special access obligations, has been on the agenda for long. However, emphasis has hitherto been on asymmetric regulation, but during the past few years, symmetric regulation has gradually gained weight in different EU countries, and the new European Electronic Communications Code also aims at putting more emphasis on symmetric regulation. The paper identifies the reasons behind symmetric access regulation possibly coming to play a more prominent role in EU telecoms regulation, the scope of symmetric regulation and how it is being articulated, and what the possible implications of symmetric regulation could be on the level of investment. The contribution of the paper is to discuss these different elements of understanding the potential role of symmetric regulation.

Asymmetric regulation for competition in European railways?

There is an increasing number of voices calling for asymmetric regulation to reinforce competition in European railways as they are liberalized in December 2020. The regulatory framework defined in the Directives of the European Union (EU) might be insufficient to ensure effective and widespread competition. But the EU Directive declares tracks a natural monopoly, and structural measures in the form of vertical separation with transport activities have been imposed. Behavioral obligations have also been imposed on infrastructure managers in the form of access obligations. There is no room for asymmetry between competing networks, as tracks are a natural monopoly. Furthermore, as access conditions are ruled by the principle of nondiscrimination, it does not seem possible to introduce asymmetries in favor of newcomers, for instance in the form of access charges below the price charged to incumbent railway undertakings. For the rest of railway assets, which only exceptionally can be considered essential facilities, the EU Directives either impose no access obligations (rolling stock, drivers, ticketing systems) or when they impose access obligations (maintenance facilities), there is no formal asymmetry, as all undertakings are subject to the same access obligations. National regulatory authorities considering the introduction of asymmetric access obligations should take into account economic literature describing how asymmetries attract inefficient market entry, and they should consider that obligations introduced at a national level might fragment the Single European Railway Area.

Asymmetric Networks and Access Charges

In order to suggest an appropriate regulatory regime in the context of firm asymmetry, this study has developed a mathematical model that allows to elucidate comparisons of three different regulatory scenarios. In the unregulated market, the low-cost firm is more likely to become dominant in the market. Symmetric regulation has an immediate effect on off-net prices, which fall to the level of its marginal costs. Finally, asymmetric regulation is a highly effective way of promoting market entry. Asymmetric regulation can generate higher social welfare.