Access Pricing and Competition in Telecommunications
This study reviews the key economic features of the telecommunications industry and outlines two benchmark models that have been developed in previous literature for introducing competition into local telecommunications. One possibility is services based competition, where entrant telephone operators have no network of their own, and another is facilities based competition, where competitors build their own networks. Determining the price for access, that is, the price at which one operator can use the infrastructure of another, plays a central role in ensuring the effectiveness of competition in each case and access price regulation can in many cases increase welfare. In addition to the theoretical discussion, we apply the theories to form an analysis of Finnish policies towards competition and access pricing in the local telecommunications market.
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