A regulatory remedy for European broadband

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This article is part of our special report Broadband: driving recovery?.

A regulatory remedy for European broadband

"Lawmakers and regulators must abandon their fixation on low prices."

The McKinsey Quarterly, 2002 Number 1

Main conclusions:

  • Regulators must be worried as their vision of deregulated markets leading to widespread broadband penetration and broad consumer choice has been delayed;
  • The challenges facing broadband are no longer technical or demand related, but economic;
  • Policy makers and regulators must abandon their focus on continually pushing prices lower and instead focus on three key issues:

    • Improve the economics of local telephone service: incumbents have universal penetration whilst new companies lack this scale and therefore face higher costs, placing them at a disadvantage;
    • Strengthen the cable television industry: telecom and television regulators must work together to allow cable companies to expand profitably;
    • Open the gate to attackersby unbundling the system, encourage the deployment of alternative access and (where competition is weak) couple incentives for incumbents with specific broadband coverage targets;
  • Enlightened regulation alone will not be enough to cover Europe with broadband: companies must also fix some major operational problems;
  • Lawmakers and regulators must steer toward an integrated set of policies that stimulate competition for broadband and local services and allow the financing of these improvements.

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