Broadband investment and regulation: A literature review

Investment in broadband communications and its infrastructures (the so-called Next Generation Networks) is receiving extraordinary attention from policy makers all over the world, due to the significant impact of high-speed Internet access on the whole economy and society. However, even before the recent financial crises, a dramatic downward trend in telecommunications investment has occurred, mainly due – at least according to incumbent operators – to excessively intrusive regulatory intervention. The typical conflict between regulation, competition and investment emerges. It is therefore important, for both future research and regulatory and practitioners’ references, to review the specialized but growing branch of the literature on this interesting and policy-relevant issue. The purpose of this paper is therefore to survey the relevant theoretical and empirical literature on the relationship between regulation, at both retail and wholesale level, and investment in telecoms infrastructures. The picture that emerges is not conclusive, and further research is still needed, both theoretically and empirically, to better understand the real impact of regulatory incentives on investments.