The Competitive and Social Implications of Mandating P2P Technologies for FTTH Networks

Abstract

GPON and point-to-point (P2P) architectures for FTTH Networks can deliver essentially the same services to residential customers. There have been calls for regulators to mandate or privilege P2P architectures because of its potential for unbundling at more levels. However, GPON’s lower civil infrastructure requirements and potential for selective deployment allow operators that use it to enter the market more profitably, with lower market shares and with lower capital requirements. Markets in which operators use GPON technology can therefore have more network competition and lower prices in urban areas, can see fibre deployment in suburban areas where P2P would not be profitable, and require much lower public subsidies in rural areas where no fibre business case is profitable by itself. These results hold both if operators are imposed access regulation and if they are not. Therefore, mandating P2P technologies will impede those competitive and social benefits to be attained.