Abstract
To fully exploit the potential of competition in liberalized telecommunications markets, the regulatory process should be as lean as possible The application of the disaggregated regulation method, which is characterized by the principles summarized below, is the adequate way to discipline sector-specific market power which still remains 1:
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Minimal regulatory basis
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The regulatory basis should not be extended beyond what is absolutely necessary. Thus, measures aimed at disciplining market power should be limited to monopolistic bottleneck areas (local networks). Price and interconnection regulation in the complementary long-distance networks is tantamount to overregulation.
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Symmetrical Regulation
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All active and potential providers of network services must be assured of symmetrical access to the monopolistc bottleneck areas so that (active and potential) competition can develop in full.
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Endnotes
See G. Knieps, The Concept of Open Network Provision in Large Technical Systems, EURAS Yearbook of Standardization, Vol 1, 1997, pp. 357–369.
The reader will find a detailed description of the “phasing-out” potential of sector-specific regulation in: G. Knieps, Phasing Out Sector-Specific Regulation in Competitive Telecommunications, Kyklos, Vol. 50, Fasc. 3, 1997, pp. 325–339.
See H. Albach, G. Knieps, Kosten und Preise in wettbewerblichen Ortsnetzen (“Costs and Prices in Competitive Local Networks”, Baden-Baden, 1997, p. 18 et seq.
See R.D. Willig, Pareto superior nonlinear outlay schedules, Bell Journal of Economics, Vol. 9, 1978, p. 56–69.
For an illustration of this issue, see p. 343 Schuster/ Stürmer, Beck’scher TKG-Kommentar zu §3 TEntgV (“The Becks Telecommunications Act Commentary on Section 3 of the Telecommunications Rate Regulation Ordinance”), in which an explicit distinction is made between the determination of the costs of efficient service provision by the regulatory authority (by application of the benchmarking or engineering approach) and the documentation of the actual costs by the regulated company.
In this regard, see M.A. Salinger, Regulating Prices to Equal Forward-Looking Costs: Cost-Based Prices or Price-Based Costs?, Journal of Regulatory Economics, 1998, Vol. 10, pp. 149–163.
See E.G. Furubotn, Economic Efficiency in a World of Frictions, Max Planck Institute for Research into Economic Systems, Discussion Paper 09-98, 1998.
See G. Knieps, Der Irrweg analytischer Kostenmodelle als regulatorische Schattenrechnungen — Eine kritische Analyse der Stellungnahmen zum WIK-Kostenmodell (“The Mistaken Approach of Using Analytical Cost Models as Regulatory Shadow Computations—A Critical Analysis of the Positions Taken on the Cost Model of the “Wissenschaftliches Institut fur Kommunikationsdienste”), MultiMedia und Recht, November 1998.
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Knieps, G. (2001). Costing and Pricing in Liberalized Telecommunications Markets. In: Sidak, J.G., Engel, C., Knieps, G. (eds) Competition and Regulation in Telecommunications. Springer, Dordrecht. https://doi.org/10.1007/978-94-010-0640-8_3
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DOI: https://doi.org/10.1007/978-94-010-0640-8_3
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