Strategy in the telecommunications market: The effects of liberalization and competition

This article identifies some of the ways in which firms in the telecommunications industry have attempted to cope with deregulation, drawing upon the experience already evident since liberalization began a few years ago. The author argues that certain types of market conditions provide particular problems for firms, to which they must respond if they are to remain prosperous. A matrix describing four market types is offered as a facsimile of the competitive conditions now found in the telecommunications industry, and examples are given from the UK. Economic, technological and political factors affect the strategic behaviour which firms must follow, but in different ways and at different times.     

Infrastructure investment and optimal access regulation in the different stages of telecommunications market liberalization

In this paper, we compare the optimal access regulation under three different market configurations that approximate the different stages of telecommunications market liberalization. We show that in the first stage of market liberalization the regulator has to balance between static efficiency and investment and that the optimal access price may be above marginal cost. In the second stage, two different outcomes are possible. If entrants tend to underinvest, the regulator balances between static efficiency and investment. If entrants tend to overinvest, the regulator sets the access price as low as possible in order to prevent or limit infrastructure duplication. Interestingly, we find that in the third stage of market liberalization the regulator may decide to promote infrastructure duplication and to set the access price above the price in the first stage of market liberalization, even if telecommunications network operators tend to overinvest in infrastructure duplication.     

Global competition and EEC policy in telecommunications: An Italian perspective

Within the framework of increasing US and Japanese competition, an interpretation is given of the future development lines of European telecommunications. Europe is lagging behind in this sector; this is explained in terms of the subdivision of services at the national level and the fragmentation of industrial areas within the respective countries. The minimum basis for recovery should be the establishment of a common European base in the telecommunications sector. A European scenario is proposed with particular attention devoted to the Italian problems in restructuring and development.     

Privacy and Canadian telecommunications regulation

This paper reviews federal communications regulation as it pertains to privacy related issues and describes several future areas of concern.     

Competition in Korean mobile telecommunications market: business strategy and regulatory environment

After the launch of PCS in 1997, the Korean mobile telephony market achieved a remarkable subscriber base growth. The market is composed of a differentiation advantage seeker, SK Telecom; a cost advantage seeker, LG Telecom; and three other carriers: Hansol PCS, Korea Telecom Freetel, and Shunsegi Telecom that do not show clear adherence to any type of advantage. Despite large growth in subscribers, price competition has not occurred after the competition except in handset subsidies. New restrictions on handset subsidies, closing the only door for price competition, favored a differentiation seeker at the expense of a cost advantage seeker. The Ministry of Information and Communication’s provisional plan for quality evaluation without price deregulation runs the risk of quality over-provision that is sub-optimal, and may further distort the business performance of carriers. Overall complete deregulation is necessary, in order to enhance the competitiveness of the Korean mobile telephony industry and to increase consumer welfare.     

Access regulation,entry and investments in telecommunications

This paper presents a model of competition between an incumbent and an entrant firm in telecommunications. The entrant has the option to enter the market with or without having preliminary invested in its own infrastructure; in case of facility based entry, the entrant has also the option to invest in the provision of enhanced services. In the case of resale based entry the entrant needs access to the incumbent network. Unlike the rival, the incumbent has always the option to upgrade the existing network to provide advanced services. We study the impact of access regulation on the type of entry and on firms’ investments. We find that without regulation the incumbent sets the access charge to prevent resale based entry and this generates a social inefficient level of facility based entry. Access regulation may discourage welfare enhancing investments, thus also inducing a socially inefficient outcome. We extend the model to account for negotiated interconnection in the case of facilities based entry.     

Reform of telecommunications regulation in Japan and Canada

Despite demographic and political differences, Japan and Canada face many similar challenges in the development of new telecommunications policy. These include interbureaucratic conflict, reorganization initiatives by the telcos and policy development by non-elected officials. Differences include the nature of policy change, the role of economic considerations and decision-making processes. This comparative analysis concludes by suggesting that each country may learn useful lessons with respect to public involvement, local rates, local measured service and the process of regulatory change.     

EC competition law and the convergence of the telecommunications and broadcasting sectors

This article surveys how convergence is dealt with in the main areas of EC competition law. First, under Article 90 EC Treaty, the Commission has not yet reached a solution to the problems of TOs holding exclusive rights over cable TV networks or providing broadcasting services over their telecommunications networks. Secondly, while the Commission has largely upheld certain policy lines in individual decisions, it has reached markedly different outcomes in the broadcasting and telecommunications sectors. The Commission has not been able successfully to integrate non-economic factors in its competition law analysis. Third, State aid problems are likely to arise in relation with production subsidies and compulsory broadcasting fees. In the end, competition law must still evolve to deal with convergence, but in doing so it is likely to pre-empt regulatory options.     

US telecommunications regulation: Will technology decide?

Twenty years ago, the telecommunications industry was an established regulated monopoly. But improvements in technology and reductions in costs have ripped apart the premises of natural monopoly and the economic rationale for public utility regulation. The authors review past US telecommunications policy and question the assumptions of the current search for a policy for the future. They believe that, for the industry to develop, institutions and restraints need to be removed.     

Access regulation and infrastructure investment in the mobile telecommunications industry

While mobile virtual network operators (MVNOs) increase competition in the mobile telecommunications industry, granting market access to MVNOs may have unwanted consequences. In particular, infrastructure investment by incumbent mobile network operators (MNOs) may be smaller. This paper examines the effects of MVNO entry and access regulation on the investment behavior of MNOs. It uses firm-level data for 58 MNOs in 21 OECD countries during 2000–2008. The results suggest that mandated provision of access is related to lower investment intensity of MNOs, while voluntary access provision has no effect. Although reduced investment incentives do not necessarily correspond to under-investment, this underscores the need for those countries where MVNOs are provided access to address the issue of investment incentives.     

Estimating consumer surplus in the mobile telecommunications market: The case of Korea

This paper estimates consumer surplus in the Korean mobile telephone services (MTS) market. The Korean mobile telecommunications market has grown rapidly since 1997 when competition was introduced and Code Division Multiple Access (CDMA) technology was commercialized. Because consumer surplus is relevant to the controversy over establishing an appropriate price level between consumers and service providers, the need for a robust measurement of benefit from MTS is increasing. The measured net consumer surplus estimated by means of elasticities of demand reached about US$48.8 billion in the period 1996–2004 and the changes amounted to about US$8.8 billion during the same period. In particular, after competition was introduced into the market with an accompanying price decrease and increase in the number of subscribers, consumers have benefited greatly. Therefore, it can be inferred that a facility-based competition policy and the reduction in price of access such as handset subsidies all played a positive role in the early diffusion of MTS in Korea. The estimated consumer surplus in this paper does not include network externality (option externality); if this were considered, the total social welfare of the consumer would be larger.     

Japan's policy on monopoly and competition in telecommunications

Telecommunications policy in Japan is about to undergo a significant change in the field of domestic telecommunications services. A monopolistic policy has long been maintained - monopoly by the government for the first 80 years and monopoly by the NTT, a domestic common carrier, for the past 30 years. Now, however, a policy of competition is required to meet the needs of citizens and companies when confronted with the age of the information society. This article analyses the trend of past, present and future telecommunications policy in Japan in relation to monopoly and competition.     

The Finnish telecommunications market: Advantage of local access incumbency

The introduction of long distance and local competition in the sophisticated Finnish market in 1994 has resulted in unparalleled growth of the Finnet group of companies, which is the incumbent in local markets and the entrant in the long distance market. The former long distance monopolist, Telecom Finland, has gained little market share in local markets. Finnet’s success was due to its hold on the local access bottleneck, the initial lack of number portability when switching carriers and its right to refuse resale of its access lines to Telecom Finland (both until June 1997). The Finnish case illustrates the importance of ownership of the local loop, even in the face of numerous independent local-only operators.     

中国纸包装市场:在竞争和变革中求发展

英国人发明“瓦楞”已有百年历史；美国人发明“蜂窝”，也近半个世纪；中国人发明的“凹凸”才一年有余；这是我国现代纸包装的“三大门类”。由此派生出来的纸包装千姿百态：纸浆模塑、纸板桶、纸管、纸角、纸托盘、纸板家具、纸板玩具、纸板衬垫、纸餐具、纸杯、纸袋及纸芯等多和复合制品，，与纸包装相关的还有纸包装技术、设计、标准、制造等专业，加上众多派生产品，成为纸包装的支持群体。大宅门要重视，小户也不能小觑。中国纸包装市场必须在竞争和变革中求发展。[编者按]     

Innovation and competition: The role of the product market

We study how competition impacts innovation (and welfare) when firms compete both in the product market and in innovation development. This relationship is complex and may lead to scenarios in which a lessening of competition increases R&D and consumer welfare in the long run. We provide conditions for when competition increases or decreases industry innovation and welfare. These conditions are based on properties of the product market payoffs. Implications for applied work and policy are discussed.     

The US telecommunications industry in transition: Bypass,regulation and the public interest

Since the AT&T divestiture, the Federal Communications Commission has been attempting to introduce competition into the telecommunications industry in the USA. This article discusses the problems of the transition period, particularly the contradictions between the policy of widespread availability of affordable basic telephone service, and the short-run burdens on most subscribers as competition erodes the toll-to-local subsidy. The authors discuss welfare economics in the telecommunications industry, and propose an interim and self-terminating plan for gradual deregulation. The proposal includes an empirical test of economic or uneconomic local exchange bypass, and a social compensation option which meets the requirements of Pareto superiority.