Competition in Communication Networks: Pricing and Regulation

By any measure, the communication sector is important. It isno surprise, then, that the communication sector has attractedthe attention of both policy-makers and economists. In thispaper, we argue that four characteristics of the networks thatdeliver communication services make this area of particularinterest. We analyse the implications of networks' cost structures;the strong complementarity between their components; the demand-sideexternalities that arise from consumption of their services;and the social obligations attached to them. Despite the attentionthat the communication sector has received, many aspects ofcompetition between networks are still poorly understood. Weidentify some of the key issues that will continue to troubleregulators and interest academics.