The Unlikely Emergence of Next Generation Networks in the Light of Prevailing Telecom Regulation: Instigating a decision supporting framework for stimulating network innovation (especially in telecommunications) based on first and second mover theory under network effects

Abstract

The current far-reaching European legislative reform of the telecommunications sector has led to a lively debate in the media about (1) the balance between consumer protection on the one hand and entrepreneurial freedom of telecommunication companies (providers) on the other hand (e.g. the discussions about the maximal minimum duration of telecom subscriptions for consumers and the discussions about network neutrality) and (2) what the impact of the new legislation would be on the innovativeness of the industry, for example: will mandated access to next generation networks stimulate or hamper investment by providers? The first debate is mainly political and will not be discussed here. This chapter focuses on the latter, which is mainly the result of insufficient scientific insights into the relation between regulation and innovation. Regarding this ‘insufficient insight’, Irwin and Vergragt (1989) already stated more than 20 years ago:

Regulation has rarely been considered as a positive means of technical control e.g. through stimulating new forms of technological response rather than simply restricting the operation of the marketplace. The whole issue of regulation, therefore, has been conceptualized as a post-innovation check on undesired side-effects rather than as a tool for directing technology towards socially desirable ends.