89 titive when alternative fixed-line infrastructures are present that can be upgraded to provide Internet services. This is more often the case in metropolitan areas. Alternative co-location facilities are also more likely in metropolitan areas because more carriers are active there, and more potential customers can be served from one particular site. Monopolistic bottlenecks remain in rural network areas. Sector-specific regulation is justified whenever local loops and co-location facilities must be considered monopolistic bottlenecks. In these cases, the incumbent carrier should be obliged to offer non-discriminatory access to its network infrastructure. 5.6 Conclusions Looking at the market for Internet service provision from the viewpoint of the disaggregated regulatory approach, this chapter comes to the conclusion that potential monopolistic bottlenecks can be found only in local communications infrastructure. Local access lines, local leased lines, and co-location space can be associated with economies of scale in the relevant output region and substantial sunk investment costs. These economies of scale have recently been exhausted by upgrading alternative facilities where this was less costly than setting up an entirely new infrastructure. However, especially in rural areas, local communications infrastructures often remain monopolistic bottlenecks. The network elements of the local access infrastructure belong to the physical layer of Internet service provision and are part of the Internet periphery. Sectorspecific regulation already applies to these network elements insofar as they belong to traditional telecommunications markets. Regulation of telecommunications markets has taken into account the importance of non-discriminatory access to local telecommunications infrastructure also for competition in Internet services markets. Chapter 9 provides an overview of telecommunications regulation in the U.S. and in Europe and answers the question whether current regulatory practice is sufficient to guarantee functioning competition in Internet service provision. The disaggregated analysis of the market for Internet services did not disclose any regulatory requirements for long-distance network capacity or for core elements of Internet service provision. These network elements, which are at the center of the discussion on potential Internet regulation, do not show characteristics of monopolistic bottlenecks. From the analysis of the cost characteristics of Internet service provision there is no need for ex-ante sector-specific regulation in long-distance network capacity or in the logical layer of Internet service provision.