Telecommunications and Energy in Systemic Transformation: International Dynamics, Deregulation and Adjustment in Network Industries

505 Pages·1997·14.355 MB·English

by  Paul J. J. Welfens, George Yarrow (auth.), Prof. Dr. Paul J. J. Welfens, Prof. George Yarrow (eds.)

Telecommunications and Energy
in Systemic Transformation
Springer
Berlin
Heidelberg
New York
Barcelona
Budapest
Hong Kong
London
Milan
Paris
Santa Clara
Singapore
Tokyo
Paul J.J. Welfens . George Yarrow (Eds.)
Telecommunications
and Energy
in Systemic
Transformation
International Dynamics,
Deregulation and Adjustment
in Network Industries
With 39 Figures
, Springer
Prof. Dr. Paul J. J. Welfens
Universitlit of Potsdam und
Europliisches Institut fUr
Internationale Wirtschaftsbeziehungen (EliW)
August-Bebel-StraBe 89
14482 Potsdam, Germany
Prof. George Yarrow
Oxford University
Regulatory Policy Research Centre
Hertford College
31-33 Westgate
Oxford OXI INZ, England
Cataloging· in-Publication Data applied for
Die Deutsche Bibliothek - CIP-Einheitsaufnahme
Telecommunications and energy In systemic transformation:
international dynamics, deregulation and adjustment in
network industries; with 40 tables I Paul J. J. Welfens ;
George Yarrow (ed.). - Berlin; Heidelberg; New York;
Barcelona ; Budapest ; Hong Kong ; London ; Milan ; Paris ;
Santa Clara; Singapore; Tokyo: Springer, 1997
ISBN-13: 978-3-642-64441-2 e-ISBN-13: 978-3-642-60519-2
DOl: 10.l0071978-3-Q42-60519-2
NE: Wei fen., Paull. 1. [Hrsg.)
ISBN-13: 978-3-642-64441-2 Springer-Verlag Berlin Heidelberg New York
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Introduction 1
Paul J.J. Welfens and George Yarrow
A. Telecommunications in Western Europe: Liberalization,
Technological Dynamics and Regulatory Developments 9
Paul J.J. Welfens and Cornelius Graack
1. Introduction 9
2. Liberalization and Market Expansion in Telecommunications 12
2.1 Global Forces in Telecoms Liberalization 19
2.2 Privatization and Deregulation in Western Europe 22
2.3 Politico-economic Deregulation Pressures 26
3. Technological Dynamics 30
3.1 Digitization 31
3.2 Integrated Services Digital Network 33
3.3 Fibre Optics, Fibre to the Home and Optical Networks 35
3.4 Mobile Communications 38
4. Regulatory Developments 40
4.1 Regulatory Developments on the EC Level 41
4.2 National Regulatory Frameworks: Developments and Experiences 46
4.2.1 Telecommunications Equipment 47
4.2.2 Value-added Services 49
4.2.3 Infrastructure 52
5. Prospects and Consequences for Central and Eastern Europe 72
Appendix 78
B. Telecommunications in Systemic Transformation: Theoretical
Issues and Policy Options 85
Paul J.J. Welfens
1. Introduction 85
2. Points of Departure in Eastern Europe 90
2.1 Structure of the Telecoms Industry in an East-West Perspective 94
2.2 Telecoms Industry as a Strategic Industry for Systemic
Transition 97
VI Telecommunications and Energy in Systemic Transformation
3. Theoretical Aspects of the Telecoms Industry 99
3.1 Some Problems of Uniform Subscriber Pricing 99
3.2 Competition, Natural Monopoly and Economies of Scope 102
3.3 External Effects of Telecoms Network Expansion 109
3.4 Oligopolistic Telecoms Industries 111
3.5 Regulation of the Telecoms Industry 113
4. Policy Options for a Modem Telecoms Policy 119
4.1 Privatization of the Telecoms Industry 119
4.2 How to Accelerate Telephone Penetration 122
4.3 Special Aspects of Mobile Telecommunications 123
4.4 Innovative Use of Telecoms 125
4.5 Capital Market Aspects 125
4.6 Social Problems 126
4.7 Principles of Efficient Regulatory Policy 127
4.8 Perspectives for Poland 130
Appendix 138
C. Modernization of Telecommunications in the Former GDR 143
Stephen Economides
1. Former GDR Telecommunications System 143
2. German Unification and Telecoms Modernization 146
D. Recent Evolution of Telecommunications in the Region of Central
Europe 153
Hanna Kontkiewicz-Chachulska
1. Introduction 153
2. Telecommunication Administration 155
3. Legislative Framework 156
4. Development Strategy 161
5. Network Development 163
6. Private Local Operators 169
7. Privatization of National Operators 178
8. Tariffs 188
9. Cellular Telephony 190
10. Conclusions 192
Table of Contents VII
E. Modernizing Telecommunications in Central and Eastern
Europe: A Business Perspective 197
Marec Bela Steffens
1. Structural Reasons for the Current Eastern Demand for
Telecommunications 197
2. Pumping Fresh Money into Old Structures is Not Enough 199
3. How to Attract Investors' Interest 201
4. Special Networks (Overlay, Mobile, Wireless Local Loop) 203
5. Regulators' Possibilities and Contradictions 205
6. Siemens's Role as Supplier and Local Manufacturer 207
F. Telecommunications Reform in the United States: Promises and
Pitfalls 213
Marius Schwartz
1. Need for Pro-competitive Regulatory Reform, and the 1996
Telecommunications Act 213
1.1 Reassessing Government Intervention in So-called Natural
Monopolies 214
1.2 Challenges to Regulatory Reform 216
2. Increasing the Reliance on Competition and Markets 219
2.1 Relaxing Legal Entry Barriers 219
2.2 Liberalizing Restrictions on Foreign Investment 221
2.3 Making Better Use of the Radio Spectrum 222
3. Role for Government: Media Cross-ownership, Cable Rate Decontrol,
Telephone-cable Consolidations 225
3.1 Media Cross-ownership 225
3.2 Cable Rate Decontrol 226
3.3 Cable-telephone Consolidations 226
4. Role for Government: Telephone Competition 228
4.1 Background 228
4.1.1 Local and Long-distance Service 228
4.1.2 Why the 1984 AT&T Breakup: Regulatory Evasion via
Favoring Unregulated Affiliates Distorts Competition and is
Inefficient 230
4.1.3 Unbundling Regulated Bottleneck Monopolies from Potentially
Competitive Segments: Alternative Approaches 233
4.2 Bell Companies' Entry into Long-distance Service 236
4.2.1 Arguments for Bell's Entry: Costs of Structural Separation 237
4.2.2 Arguments against Bell's Entry: Preventing Access
Discrimination 239
VIII Telecommunications and Energy in Systemic Transformation
4.2.3 Competitive Safeguards in the 1996 Act 241
4.3 Promoting Local Competition 244
4.3.1 Local Telephone Networks and Types of Entrants 244
4.3.2 Benefits of Resale or Partial-facilities Entry 246
4.3.3 Requirements of the 1996 Act: Interconnection and
Unbundling 247
5. Reducing Cross-subsidies and Revamping Universal Service 249
5.1 Cross-subsidies, Common Costs, and Economic Efficiency 251
5.2 Distortions in Current System and Tension with Competition 253
5.3 Reforming Universal Service 255
5.4 The 1996 Act 258
6. Conclusion 260
G. Regulation and Tariff Policies in the Energy and
Telecommunications Sectors i~ the Transition Countries:
The Case of the Czech Republic 271
Zdenek Hruby
1. Introduction 271
2. Features of the Energy Sector 271
3. Price Regulation and Tariffs in the Energy Sector 274
4. Telecommunications Sector Features 279
5. Regulation and Tariffs in the Telecommunications Sector 282
6. Situation and Approaches in CEC and EU 286
7. Conclusions 288
H. The Process of Systemic Transformation and Reforms in the
Energy Sector: The Regulatory Issues of the Reforms 295
Andrzej Szablewski
1. Introduction 295
2. Systemic Transformation and Reforms in the Energy Industry 295
3. The Model of an Independent Regulation 298
3.1 The Concept of Reforms in the Energy Sector 299
3.2. The Justification for Independent Regulation 300
4. Controversies Surrounding the Model of Independent Regulation 302
5. Regulatory Authority and Antimonopoly Office 304
Table of Contents IX
I. Restructuring and Regulatory Reform in the Polish Energy Sector:
an Assessment 307
George Yarrow
1. Introduction 307
2. The Energy Sector in Poland 311
3. Policy during the Initial Phase of Economic Transition 314
4. Industrial Restructuring 317
4.1 Restructuring in Gas 319
4.2 Restructuring in Electricity 321
4.3 Conclusions on Structural Decisions 324
5. Regulation 326
5.1 The Problem of Delegation 326
5.2 The Trade-offs 327
5.3 The Consequences of Delay 329
6. Conclusions 330
J. Energy Law Developments in the European Union and Poland 335
Anita Ronne
1. Introduction 335
2. Energy Policy Developments 335
2.1 European Union 335
2.2 Poland 337
3. New Legislation 338
3.1 European Union 338
3.1.1 Primary EU Law 338
3.1. 2 Secondary Legislation 340
3.2 Poland 343
4. Conclusion 347
K. Institutional Choice or Muddling Through -Problems of
Transformation in the Electricity Supply Industry in Russia 351
Petra Opitz and Wolfgang Pfaffenberger
1. Institutional Choice in the Phase of Transformation 351
2. Models for Network-oriented Energy Sectors in the West 353
2.1 Special Characteristics of the ESI 353
2.2 Elements of Competition 354
2.3 Transformation in Different Political Systems 358
2.3.1 Germany 358
x Telecommunications and Energy in Systemic Transformation
2.3.2 USA 361
2.3.3 European Union 362
2.3.4 Great Britain 364
3. The ESI in Russia 365
3.1 Basic Energy Situation 365
3.2 State of the ESI 368
3.3 State of the Institutional Reform of the Sector 371
4. Analysis of the Reform Process 376
4.1 General Problems of the Present Reform 376
4.2 Regional Interests -Siberia 383
4.3 The Concept of Privatisation in the Discussion 385
5. Cooperation with Western Europe 388
L. Co-operation in Energy Policies:
European Union (EU) - Eastern Europe 393
Peter Palinkas
1. Introduction 393
2. East-West Co-operation in the Electricity and Gas Sector 395
2.1 The Electricity Sector 395
2.2 The Gas Sector 404
2.2.1 Natural Gas from the Former Soviet Union for Western
Europe 404
2.2.2 The Outlook: Natural Gas from the CIS in the Context
of Meeting Future Requirements 405
2.2.3 New Areas of Co-operation 406
2.2.4 Stable Framework Conditions as a Prerequisite for
East -West -Co-operation 407
2.2.5 Examples of Co-operation in the Gas Sector 408
3. Transeuropean Networks (TEN) 411
3.1 Short Overview 411
3.2 Gas Pipeline between Russia and the EU 411
3.3 The East-West High Power Transmission System as an Essential
Part of the Baltic Ring 412
3.3.1 Introduction 412
3.3.2 Rough Investment Evaluation for the Baltic Ring 413
3.3. 3 East-West High Power Transmission System 413
3.3.4 Conclusions 415
4. Summary 418