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Cambridge, Massachusetts - August 4, 2010 - Local loop unbundling - if implemented correctly - will promote and enhance competition, broadband penetration, and economic welfare in emerging markets lacking this reform, according to a new report from Pyramid Research (www.pyr.com).
How Operators Can Benefit from Local Loop Unbundling Done Right examines the impact on private investment, service penetration, and prices that could result when the privatization process of the telecom sector lacks a regulatory framework promoting competition among the participants. It also examines how LLU could be used to mitigate those unequal conditions. Finally, case studies of three countries - the U.S., U.K., and India - look at the strategic challenges and difficulties involved in reform implementation. Download an excerpt here. Purchase the report here.
Governments of developed and emerging countries have promoted the telecom sector by implementing public policies, such as local loop unbundling (LLU) to encourage service penetration, improve the competitive environment and increase their portfolio of services at prices affordable to the population, notes Jose Manuel Mercado, analyst at Pyramid Research. “Once privatization of the local loop took place, it was not always accompanied by appropriate public policies and regulations to encourage the new private company to invest in infrastructure, as expected,” he says. “Even though the new company owned the local loop, without any competition to apply pressure, it did not invest in the infrastructure at desired levels.”
“Competition among operators is what has driven most infrastructure investment; through local loop unbundling, a liberalized market will see services being offered at affordable prices and coverage improving,” Mercado explains. “The competitive behavior promoted by unbundling will put all competitors on level ground.”
However, LLU is not a sufficient condition on its own for achieving higher penetration rates; the economic situation of each country, literacy level, and income distribution, as well as other economic conditions affect the development of the telecommunications sector, but LLU is a prerequisite for success. Furthermore, price and cost adjustment is crucial for the entry of new telecom competitors as part of rolling out LLU. “If this process is not regulated before implementing LLU, entrants could face a price war and would not be able to offer their services above costs, leaving them out of the market,” says Mercado.
How Operators Can Benefit from Local Loop Unbundling Done Right is part of Pyramid Research's Global Telecom Insider report series. Download an excerpt of this report here. This report can be purchased online here or by contacting info@pyr.com.
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About Pyramid Research
Pyramid Research (www.pyr.com) offers practical solutions to the complex demands our clients face in the telecommunications, media and technology industries. Our analysis is uniquely positioned at the intersection of emerging markets, emerging technologies and emerging business models, powered by the bottom-up methodology of our market forecasts for over 100 countries – a distinction that has remained unmatched for more than 25 years. As the telecom research arm of the Light Reading Communications Network, Pyramid Research works with Heavy Reading, providing the communications industry's most comprehensive market data, trusted research and insightful technology analysis.
About Light Reading
Founded in 2000, Light Reading (www.lightreading.com) is the leading online media, research, and event focused company serving the $3 trillion worldwide communications market. Lightreading.com is the ultimate source for technological and financial analysis of the communications industry, leading the media sector in terms of traffic, content, and reputation. Light Reading’s research arms, Heavy Reading and Pyramid Research, provide the most comprehensive communications research, market data, and technology analysis in close to 100 markets around the world. Light Reading produces nearly 20 targeted communications events including TelcoTV, and TelcoTV Asia, Ethernet Expo New York and Ethernet Europe, and The Tower Summit @ CTIA, as well as focused one-day events tailored for cable, mobile, and wireline executives in the US, Europe, India, and China. Light Reading was acquired by United Business Media in August 2005 and operates as a unit of TechWeb.
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UBM TechWeb (http://www.ubmtechweb.com/), the global leader in technology media and business information, enables people and organizations to harness the transformative power of technology. Through its core businesses - media solutions, marketing services, and professional information - UBM TechWeb produces the most respected and consumed brands, applications, and services in the technology market. More than 14.5 million business and technology professionals (CIOs, IT and IT Support managers, Web and digital professionals, software and game developers, government decision makers, telecom providers and business executives) actively participate in UBM TechWeb’s communities. UBM TechWeb brands include: global face-to-face events such as Interop, Game Developers Conference (GDC), Web 2.0, Black Hat, and VoiceCon; large-scale online networks such as InformationWeek, Light Reading, and Gamasutra; research, training, and certification services, including HDI, Pyramid Research, and InformationWeek Analytics; and market-leading magazines such as InformationWeek and Wall Street & Technology. UBM TechWeb is part of UBM, a global provider of media and information services for professional B2B communities and markets.
Press contact:
Jennifer Baker
+1 617 871-1910
jbaker@pyr.com
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