Template-type: ReDIF-Paper 1.0
Author-Name: José G. Aguilar Barceló
Author-Email: eccuaz4@hotmail.com. 
Author-Workplace-Name: Universidad Complutense de Madrid, Instituto Complutense de Análisis Económicos (ICAE)
Author-Workplace-Homepage:
 https://www.ucm.es/icae
Title: A Dynamic Model of Final Service Competition in fixed Electronic Communications under a Capacity 
	Interconnection Regime
Abstract: Recientemente el regulador español ha implementado un nuevo modelo de interconexión en redes fijas 
	de telecomunicaciones basado en la compra de capacidad que podrá ser utilizado en combinación con el 
	modelo habitual de interconexión por tiempo. Se propone un modelo dinámico de competencia en duopolio 
	en el cual el entrante puede comprar ex ante un cierto nivel de capacidad al incumbente paraluego 
	ambos operadores competir en precios. Se introduce la posibilidad de que el entrante pueda asignar 
	eficientemente el tráfico entre distintas franjas horarias. Los resultados muestran que el uso 
	simultáneo de ambos modelos genera una competencia más agresiva en precios y puede llegar a producir 
	significativas ganancias de eficiencia (asignativa y otras internas a la firma). De cualquier forma, 
	el entrante necesita alcanzar una masa crítica antes de que el nuevo modelo pueda representar una 
	alternativa para él. Además, una vez alcanzado este nivel, su conveniencia para el entrante dependerá 
	de determinadas condiciones.
Abstract: The Spanish regulatory authority recently implemented a new interconnection regime based on
	capacity (and not per time) payments in fixed telecommunications. We propose a dynamic duopolistic
	model of final service competition in which the entrant first acquires a certain capacity at the local loop
	(at a fixed payment) from the incumbent and then both operators compete in prices for the final services.
	We introduce the entrant’s possibility to assign efficiently the traffic he offer between different hours
	along the day as well as the possibility for him to use the capacity based model as well as the per-unit-oftime
	interconnection regime vis à vis the incumbent. The results show that, the simultaneous use of both
	interconnection models (instead of only the one based on time) leads always to tougher competition (more
	aggressive pricing) in the final service market and efficiency (internal to the firm and allocative) gains.
	Nevertheless, the entrant needs a minimum scale before this new model can be a viable alternative. In
	addition, once reached this scale, its convenience for the entrant will depend on certain conditions.
Classification-JEL: C72, L13, L51, L96.
Keywords: Interconnection per time, Interconnection by capacity, Dynamics of the competition,
	Regulation, Network dimension.
Length: pages 30
Creation-Date: 2002
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae0202.txt
File-URL: https://eprints.ucm.es/id/eprint/7651/1/0202.pdf
File-Format: Application/pdf
Handle: RePEc:ucm:doicae:0202