Enzo Pontarollo

The paper analyses the two alternative models of competition, which have been promoted by the Regulatory Authorities in fixed telecommunications. The facility-based competition requires the new entrants to build their own infrastructures, in order to be independent from the network of the incumbent, while in the service-based model, the new entrants provide their services using the incumbent’s network. Both models have pros and cons and the regulators have tried to combine the advantages of both of them. However, enduring economic bottlenecks remain in fixed telecom networks, mainly in the local loop, where infrastructure-based competition is unlikely to emerge, due to the fundamental economics of building competing infrastructures. Therefore, the Regulatory Authorities have imposed the local loop unbundling (LLU) in order to speed up the development of broadband services. However, further steps may be necessary to ensure that LLU is really successful, allowing the development of competitive markets.