Competition in the Local Loop: unbundling or unbungling?

What is the aim of unbundling? It is an end in itself, or a means to an end? If the former then perhaps the answer is structural separation between wholesale and retail. If the latter, how do we know when that end has arrived? For instance, how do we measure the level of local service competition? By the market shares of the operators? By the penetration rate of networks among residential and business customers? By trends in prices and quality and range of services on offer? The first measure may indicate how successful market entrants have been but is not inconsistent with a sluggish market. The second measure can signal the achievement of a social or economic objective that is not inconsistent with zero competition. The third can measure consumer welfare but is not inconsistent with either low penetration rates or dominance. Clearly we need to meet a combination of objectives before unbundling can be claimed a success. But how do we know that unbundling was responsible for the success and didn’t delay its achievement?

 

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