Structural separation or integration in Italian fixed TLC : regulatory and competition issues
Title: Structural separation or integration in Italian fixed TLC : regulatory and competition issues
Author: PRANDINI, Alberto
Series/Number: Quaderni dell’Istituto di Economia dell’Impresa e del Lavoro; 2006/43
In this paper we investigate the restructuring process of the Italian fixed TLC industry, which the recent debate has deemed as far from being satisfactorily completed. We will focus on the feasibility and desirability of alternative vertical structures for the Italian fixed communication industry, considering in particular the structural separation – as opposed to integration – of the former monopolist. After a introductory discussion of the most critical characteristics of the sector and a brief portrait of the Italian industry for fixed telecommunication services, we focus on the regulatory framework currently in force. This body of regulation is inspired by facility-based competition, in line with EU directives, and characterised by vertical integration coupled with accounting separation between network and commercial costs: the analysis stresses both its (actual and potential) advantages as well as drawbacks from the point of view of regulatory as well as competition policies, finding substantial empirical evidence of anticompetitive behaviour. We will then consider an alternative industry design, implying structural separation of the network from incumbent's commercial divisions, as inspired by service-based competition. In the final section we conclude arguing in favour of ownership unbundling of the network.
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