THE ADOPTION OF OPTICAL-SYSTEMS - AN ECONOMETRIC COST MODEL OF THE EUROPEAN TELECOMMUNICATIONS CARRIERS

Following the mainstream applied economic literature on the production structure of the telecommunications (TLC) carriers, the paper provide s an econometric estimation of the over-all effects of the adoption of optical systems in junction and trunk network on the aggregate long-r un costs of the existing TLC European carriers. The analysis uses data from 16 European carriers over the 1980-'92 period. The optical syste ms are shown to have significantly reduced the costs of the European c arriers. Firms operating non-rural and high density areas have benefit ed especially from the adoption of optical systems. In addition, the e fficiency gain related to fibre optic lines turns out to be cumulative .