Unbundled Network Elements: Global experiences and game theoretical analysis

On September 28th, 2008, MIIT released Urgent Notice on the Co-construction and Sharing of Telecommunications Infrastructure which refers to the policy of Unbundled Network Elements (UNE), and triggered a new exploration on UNE. This article introduced the unbundling policy and its implementation in the United States and Europe, and mainly analyzed strategies of the stakeholders by a modified Cournot duopoly model for the UNE price regulation. Based on the global experiences and game theoretical analysis, we suggest that: (1) the regulator should mandate the unbundling policy to foster competition in telecommunications market, so as to improve the social welfare; (2) the network elements should be subdivided first, and be treated differently. We suggest that new network elements be exempted from the unbundling rules, and in underdeveloped areas, the regulator promise the ILEC a higher profit margin and encourage them to lease out their facilities.