The unlikely emergence of Next Generation Networks in the light of prevailing telecom regulation

Abstract

Acknowledging the currently limited scientific insights in the relation between regulation and innovation, this paper aims to shed a new light on the (im)possibilities to pace innovation by means of regulation. More concrete, it will focus on the meso level (industry) discussions about stimulating the deployment of so-called “Next Generation Networks” (NGNs) for telecommunication. From structured application of innovation timing theory combined with the concept of network effects in telecommunications industry and confronting these with new entrance strategies, a better understanding of the variegated influence of several regulatory measures results; because of network effects enhancing some first-mover advantages, a first mover is likely to become a provider with sustainable market power in an emerging telecommunication market. If a leapfrog-enabling technology gateway is available, investing in a NGN appears to be a more attractive strategy for the new entrant in an unregulated telecommunications market than investing in a “Same Generation Network” or setting-up Service Based Competition. Cost-based mandated access leads to declining attractiveness of investing in NGNs. Relaxing mandated access obligations appears to influence the development of NGNs positively. Furthermore we state that interconnectivity and portability obligations as well as guaranteeing more regulatory certainty have positive effects on all new entrance strategies.