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Competition–regulation interface in telecommunications

What’s left of the essential facility doctrine

01 March 2010

Competition–regulation interface in telecommunications

What’s left of the essential facility doctrine

Published in: Telecommunications Policy, Vol. 34, Nos 1-2, February-March 2010

The essential facility doctrine lies at the core of telecoms regulation since its very first steps in the United States and in the European Union. Later, the doctrine spread around the world and currently stands as a key pillar of the liberalization efforts underway in several countries. However, the concept of essential facility is a very dynamic one in the telecoms field, which makes it hard for regulators and regulated stakeholders to strike the right balance between incentives to invest in new infrastructure and securing access-based competition in the short run. Experiment such as the “stepping stones” approach in the US and the “investment ladder” approach in the EU have led to very mixed results, in the US, the FCC eventually abandoned this approach to stimulate investment in new high-speed infrastructure through “access holidays”. The decline of the essential facilities doctrine in the US was not echoed by any relaxation of regulatory obligations in the EU, Canada and other countries, to the contrary, the US now seems likely to reconsider the essential facilities doctrine, at least in the application of antitrust law. Whether this will lead to a revival of the doctrine in the US and around the world, especially for next generation access networks, remains to be seen. The paper argues that interpreting the concept of essential facilities too broadly is likely to lead to insufficient incentives to invest in the future, it is thus advisable to get back to a narrow interpretation of this doctrine, in order to strike the right balance between the incentives to engage in infrastructure-based competition and the goal of boosting service-based competition in the short-term. Several debates that are currently raging around the world—including the debate over NGA deployment and the net neutrality querelle—are likely to be affected by the essential facilities doctrine in the years to come.

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Competition–regulation interface in telecommunications What’s left of the essential facility doctrine