Foreword

The importance of liberalisation, regulation and deregulation on business developments in various sectors has increased in recent years. Utilities and network industries as well as health and financial services are all examples for regulated markets. Beside their differences, these sectors are characterised in a way that strategic scopes of market participants are to a high degree influenced and governed by regulatory frameworks and decisions.

The author of this book investigates to which extent regulation is affecting strategic investment decisions on broadband markets. This question is both very up to date and of fundamental importance as scholarly research and practitioners are controversial on the benefits of regulation and its impact on infrastructure investments. In particular, existing research disagrees whether regulation is a necessary precondition for investments or a hindrance, which displaces investment incentives by opening incumbent networks to competitors.

To figure out this question, the author concentrates on two markets, namely the German broadband market and its counterpart in the UK. Despite similar legal frameworks defined by common Directives established on the European level, different regulatory strategies have evolved, which makes it useful to contrast these markets with each other. Based on a thoroughly developed theoretical framework, a large number of interviews with market experts and various statistical data, three detailed case studies concentrate on the structural level, business regulator relationships and the consequences of regulatory interventions on wholesale markets.

The author's findings underline that simplified "truths" as they are frequently praised by various interest groups do not hold out against a sophisticated scholarly discussion. His results emphasise the connection between regulation and the profitability of different business models, but they also show that rather than having regulatory reasons, strategic investment decisions are predominantly driven by the overall economic situation, assumed demand for certain products, access to financial markets, and perceptions about risks and chances associated with those investments. Building on these insights, ten theses are developed and some useful policy recommendations are deduced.

Overall, on the edge of economics and business literature, a remarkable contribution to existing scholarly research is presented here, which is characterised by a thorough research procedure and an enormous in-depth knowledge. I therefore hope that this book will be received positively by the scientific community as well as by professionals and executives concerned with regulatory issues. It spurs the debate and the understanding of a field which will gain even more importance in the future.

Prof. Dr. Dres. h.c. Arnold Picot

Preface

A decade after the liberalisation of most telecommunication markets in Europe, operators face huge challenges due to various drivers including technological progress, changing user behaviour and capital markets. In the context of these changes, benefits and designs of regulation are put to test.

High investments associated with fibre and next generation networks challenge existing regulatory regimes as telecommunications operators call for improved regulatory certainty. At the same time, the complex of wholesale regulation, unbundling and investment behaviour of both incumbents and new entrants is controversially discussed. These significant issues are addressed in the thesis at hand dealing with the relationship between strategic investment decisions and regulation in European broadband markets.

My book aims to provide explorative insights on this relationship on different levels. I pursue a positive research aim, which is necessary for developing an overall comprehension on the complex under observation, and thus to be able to develop hypotheses and deduce policy recommendations. In this respect, the book addresses scholars in the scientific community as well as professionals, regulators and politicians dealing within and defining the regulatory frameworks in a dynamic and turbulent environment.

The thesis at hand was written during my tenure at the institute of information, organisation and management at the Ludwig-Maximilians-University in Munich. Many insights would not have been possible without the generous help and support of numerous people.

First of all, I want to thank my academic teacher and supervisor Prof. Dr. Dres. h.c. Arnold Picot, who played a significant role for the accomplishment of this book. Employing me as a research assistant and lecturer at his institute and involving me in various research projects in the context of telecommunications and regulation, he raised my awareness of developments in a challenging and fascinating industry. Furthermore, he accompanied this project with helpful suggestions, constructive criticism and steady encouragement.

Next, I would like to express my gratitude to Prof. Dr. Thomas Hess for the co-supervision of my thesis and to Prof. Martin Cave for inviting me to the Warwick Business School and conveying me with precious insights on UK's and Germany's telecommunication markets.

Beyond these credits to my academic advisors, I am deeply indebted to my interview partners, who granted invaluable insights on their experiences and estimations. My discussions with them and their willingness to support my project were crucial for the success of the empirical research conducted on behalf of my project.

Furthermore, I owe special thanks to all of my colleagues and friends at the institute of information, organisation and management, who have contributed to my work in so many different and decisive ways: Dr. Rahild Neuburger, Daniela Absmayr, Christine Hartig and Angela Sanganas created an enriching atmosphere at the institute and supported me in various ways. Jakob Assmann, Oliver Baumann, Beatrix Ertsey, Dr. Marina Fiedler, Nico Grove, Christoph Janello, Dr. Jonathan Landgrebe, Martin Schmid and Dr. Isabell Welpe overhauled earlier versions of this manuscript and made lots of precious suggestions. Very special thanks go to Dr. Till Kruse and Dr. Florian Stadibauer. In a research circle we engaged in relentless discussions of methodological and theoretical research issues as well as on football. Although we often ended up confused, this debate club had large impact on all of our works.

I cordially thank Christina Löser. During the entire project she was a strong pillar and helped me to remain focused, which is crucial to accomplish such a challenging task.

Above all, I express my deepest gratitude to my parents Karin and Heinrich Wernick. By educating me and supporting me in so many different ways they have established the basis of this work and showed me the importance of a stable family in today's turbulent world. I thus dedicate this book to them.

Christian Wernick