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International Economics and Economic Policy

, Volume 4, Issue 2, pp 109–133 | Cite as

Changes in industry structure and technological convergence: implications for competition policy and regulation in telecommunications

  • Timothy J. Tardiff
Original Paper

Abstract

The two leading US long-distance carriers—AT&T and MCI—have recently been acquired by two of the four major incumbent local exchange carriers—SBC and Verizon—and shortly thereafter, the new AT&T (SBC and the old AT&T) acquired BellSouth. Contemporaneously, alternatives to traditional voice communications provided by cable television and internet- based providers indicate a shifting of competition from a single voice market to the “triple play” of voice, video, and high-speed data. These developments imply a fundamentally different model of competition and industry structure than the one of “dominant firms” supplying essential inputs to new entrants for traditional voice service that was envisioned in the 1996 US Telecommunications Act, as implemented by Federal Communications Commission. In response to these developments, state governments, the FCC, and Canadian authorities have enacted legislative or regulatory changes that limit retail price regulation to services such as the basic residential telephone line. Approaches for assessing market power and other competitive issues that account for the specific characteristics of the emerging (converging) industry are also discussed. The paper concludes by describing the implications of the emerging nature of telecommunications competition for future ex ante and/or ex post regulation, market power assessment, continued regulation, and antitrust analyses.

Keywords

Telecommunications Competition Deregulation Industry structure and performance Convergence 

JEL Classification

L43 L51 L96 

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Copyright information

© Springer-Verlag 2007

Authors and Affiliations

  1. 1.Huron Consulting GroupBostonUSA

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