International Handbook on Economic Regulation

International Handbook on Economic Regulation

Elgar original reference

Edited by Michael A. Crew and David Parker

Michael Crew and David Parker have compiled a comprehensive, up-to-date and detailed analytical work on leading research issues in the economics of regulation. With contributions from international specialists in economic regulation, the Handbook provides a comprehensive discussion of major developments in both the theory and practice of regulatory economics. This book will be an indispensable source for both students and practitioners of regulation.

Chapter 14: Regulation and the Structure of the Telecommunications Industry

Gregory M. Duncan and Lisa J. Cameron

Subjects: economics and finance, competition policy, industrial economics, public sector economics


Gregory M. Duncan and Lisa J. Cameron Introduction1 What will the telecommunications industry look like in five or ten years? Certainly not the way it looks today. What role will regulators have in five or ten years? Certainly not the one they have today. Ignoring the rapidly emerging competitive trends, we currently have a traditional telephone company (called the ILEC, short for incumbent local exchange carrier) competing with a number of smaller telephone companies (called the CLECs, short for competitive local exchange carriers) for ‘wireline’ (a technology) customers wanting to make phone calls – this is called a ‘voice’ service. Then we have the cable-TV company (usually only one in an area unless it is a major metropolitan area), which sells ‘video’ services and high-speed access to the Internet (a ‘data’ service) using ‘cable’ (a technology). The cable company competes with satellite (a technology) companies (DISH Network and DIRECTV) for video customers and wireline companies for Internet customers. Then there are the wireless companies who compete with both the wireline and cable companies. The conventional wireless companies (like Cingular and T-Mobile) compete mostly with the wireline companies for voice services, but we have some new-to-themarket companies that offer wireless (Wi-Fi and WiMAX) data services for connecting to the Internet. What role does regulation play in the current scenario? Currently, the regulators (both federal and state) generally apply a very light-handed approach to all these service providers except the ILECs. This approach is based on the belief that the ILECs wield market...

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