Regulation and Investment in European Telecoms Markets
SPC Network presents its strongest evidence yet of the relationship between effective, pro-competition regulation and investment in European telecoms markets.
The European Union Directives regulating the electronic communications sector call for harmonised regulation and on national regulatory authorities to encourage efficient investment in infrastructure. However, there is strong evidence that the new regulatory framework has been implemented inconsistently across the EU and that levels of investment per capita vary substantially, from $40 per capita in Poland to over $200 in the UK. Using separate measures of regulatory effectiveness and reform developed by the European Competitive Telecoms Association and by the OECD, this paper seeks to establish whether there is a relationship between regulation and investment. We develop cross-sectional, lagged and pooled time-series/cross-section regression models using investment per capita as the dependent variable and a measure of regulation as one of the explanatory variables. In all model specifications we find a significant and positive relationship.
