The open-access telecommunication transmission network in the Canary Islands: an alternative proposal to the current management model?

Abstract

Purpose– This paper aims to study the competition problems and market failures in the Canary Islands and propose an alternative management model for the telecommunication transmission network. This model is based on a wholesale-only open-access transmission network, available to all the retail service providers of this region, and managed by a unique entity subject to regulation with cost-based prices. The proposal hopefully will help to debate about the implementation of certain regulatory models in the networkindustries, concerning telecommunicationsubmarinecablesconnectingarchipelagos. Design/methodology/approach– An empirical approach has been used, based on the observation and analysis of the regulatory policies applied to the wholesale transmission networks in the Canary Islands, Azores andMadeiraarchipelagos. Findings– Results show a persistent margin squeeze situation on the retail broadband market in the Canary Islands, due to the pricing strategy on the Spanish mainland-Canaries wholesale market, which is, in turn, delaying the entry of alternatives and the level of development and efficiency of competition. The risk of duopoly collusion is also present on this wholesale market. Additionally, public aids will be needed to replace the systems connecting with the non-capital islands and to provide redundancy to El Hierro. The alternative proposal might help preventing the above. Eventually, several insights are consideredforfurtherinvestigation. Originality/value– Little attention has been paid to this topic in the literature, regarding the analysis of regulatory policies applied over fiber optic submarine cable infrastructures in fragmented territories like archipelagos. Consequently, an empirical analysis has been accomplished to emphasize this research work, basedontheregulatorypoliciesadopted.