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New technologies and convergence of markets: implications for telecommunications regulation

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  • T.J. Tardiff

Abstract

This paper evaluates regulatory rules that have been established to facilitate competitive entry, such as the identification and pricing of inputs sold to competitors, in terms of their ability to promote competition. Of particular interest is the efficacy of these rules as competition evolves and the prospects for removing particular rules (sunset provisions) as markets become sufficiently competitive and/or alternative production processes emerge. For example, requirements that incumbent local exchange carriers continue to provide unbundled circuit switching functions when (1) competitors have deployed a growing number of competing facilities and (2) technological advances are producing equipment that provides similar functions in different ways can inhibit economic efficiency and reduce investment incentives. As multi-product firms add new services in often unpredictable ways (through research and development and/or acquisition) and compete by improving their utilization of economies of scale and scope, regulation becomes increasingly ineffective in directing market developments and inimical to efficient competition.

Suggested Citation

  • T.J. Tardiff, 2000. "New technologies and convergence of markets: implications for telecommunications regulation," Competition and Regulation in Network Industries, Intersentia, vol. 1(4), pages 447-469, September.
  • Handle: RePEc:sen:journl:v:1:i:4:y:2000:p:447-469
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