Economy Implications of Regulation

This thesis analyzes the implications of regulation on the transformation to a Digital Economy. A gap analysis shows that Czech Republic is significantly lagging behind in terms of connectivity, which is an essential precondition for a transformation to a digital age. The regulator promotes the entry of the new player as a solution for this situation. However, a simulation based on Herfindahl Hirschman Index does not support this view. This outcome is further supported by the results of correlation between market competitiveness and network advancement, which does not suggest any relationship. These findings are in line with empirical evidence from EU markets, which prove that a three-operator market is efficient and delivers attractive competitive services to the customers and society. The root cause of this situation lies in the current telecommunications regulation, which failed to create a sustainable digital ecosystem for the transition to a digital economy. This paper concludes, that regulatory framework needs to be redefined to address new challenges ahead. The regulatory priority should be shifted from service focus to encouraging long-term connectivity investments, differentiation, and competition.