Vertical Separation of the Telecom Monopolist’s Access Networks


Vertical Separation of the Telecom Monopolist’s Access Networks
Bruce J. C. Chen , Howard S. H. Shyr
Vertical Separation, Functional Separation, Structural Separation, Next Generation Access Network (NGA), Essential Facility, Equal Access, Non-discrimination, Ladder of Investment
Fifteen years after the liberalization of telecom markets in Taiwan, newcomers
still play no match for the former monopolist operator, especially when it comes to
wireline-based services. Above all is deficient enforcement of the nondiscrimination
rules on telecom access networks held responsible for this outcome.
According to the experiences of telecom regulatory authorities in most OECD
member states the access network is the “essential facility” and shall be to open
access for competitive operators. The ex-ante regulations imposed on the incumbent
operator, who owns the essential facility, aim to prevent the abuse of market
The regulatory experiences on access networks further show that once behavior
regulations alone help little to discourage the incumbent operator from discriminatory
practices or cross-subsidization, the regulatory authorities shall have
resort of some structural remedies such as vertical separation. In order to ascertain
when and how vertical separation is engaged, the AT&T breakup case, the BT functional separation case and the vertical separation norms in EU Telecoms Reform
are analyzed in this article. The principle of “competition drives investment”,
which European Commission adapts for the NGA access, is referable for dealing
with the CHT dominance in the access network in Taiwan. This article concludes
that a thorough review of functionality of the Telecom Act regarding to introduce
workable competition on the infrastructure level and amendments which incorporate
vertical separation are recommended.
Abstract Article



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