IS UNIVERSAL SERVICE JUSTIFIED BY THE PUBLIC INTEREST? FROM THE EARLY DAYS TO THE DIGITAL AGE

It is commonly accepted that universal service is clearly justified by reference to the public interest, and this understanding stems from the natural monopoly paradigm. However, telecommunications monopolies have never been ‘natural’, and the alternative to regulation has always been a competitive marketplace. The liberalisation movement had a chance to create a genuinely competitive industry but failed to do so. This article argues that the universal service dogma has played a significant role in the formation of the ordered competition regime of modern telecommunications, and explains this phenomenon in terms of public choice theory.     

Analysing the Impact of Regulation on Disruptive Innovations: The Case of Wireless Technology

The paper analyses the role of regulation in the suppression of disruptive innovations and shows that this process might be explained by the dependance on the path of joint evolution of regulation and the mainstream technology. Industrial policy in highly regulated industries such as wireless telecommunications is able to support evolution of established technologies and adjust itself to sustaining innovations, while regulatory disconnection impedes disruptive technologies, and the market plays a quite secondary role in this process. We observe more innovations in those parts of telecommunications where regulator is less active, but the core, the physical layer, of the industry is changing in sustaining way of development of the technology. The paper argues that the problem of impediment to disruptive innovations could be alleviated if the crucial resources of the industry were accessible for a number of potential innovators and newcomers. The openness makes easier the appearance of disruptive technologies, and regulation must facilitate it in order to promote opportunities for creative destruction.     

The political economy of ‘ordered competition’ in European telecoms

This article discusses the current efforts of policymakers to spur development of telecommunications infrastructure. It argues that the policy of ‘ordered competition’, widely implemented in this sector, has formed a highly beneficial environment for major players, who have the ability to influence the regulatory machine. The system protects the status quo, impedes the efficiency of the market process and allows unnecessary public subsidy of the industry's development. The main alternative to this regulatory regime is structural reform of the industry and the formation of a genuinely competitive marketplace which could function without ex ante regulation.