This paper describes the underlying policy and technological/market framework that created this situation of two competing local networks. We will explain why and how the present strong fixed infrastructure competition could develop by using an integrated multi-disciplinary approach. On the one hand technological developments have changed the market situation of two non-competing networks (POTS versus CATV, both servicing unique functions) into competing networks (by using technology innovation). Historical policy decisions created the basis for this (both networks were built before issues such as government subsidies/ownership and unauthorized state aid started to become relevant). However, combined with the European/national general policy choices to liberalize and privatise the telecommunications market (as formulated and put into place in the early nineties, strong incentives were created for market driven competition (instead of detailed regulatory intervention being the main driver). The paper shows that the impact of both technological/policy created market convergence and the creation of a 'triple play'-product have resulted in a disruptive situation where vacancy rates in both networks are increasing. We estimate that more than 40% of the local loops is no longer active.
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