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Traditional Telecommunications Networks

The International Handbook of Telecommunications Economics, Volume I

Edited by Gary Madden

This major reference work provides a thorough and up-to-date survey and analysis of recent developments in the economics of telecommunications. The Handbook serves both as a source of reference and technical supplement for the field of telecommunications economics.
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Chapter 8: Global competition in telecommunications

Douglas A. Galbi


Douglas A. Galbi INTRODUCTION In the mid-1990s a series of global alliances among established telecommunications companies was widely considered to point to the future of international telecommunications competition. Deutsche Telecom, France Telecom and Sprint formed Global One. British Telecom and MCI joined together in a venture called Concert, while AT&T put together a looser group of carriers under the names World Partners and Uniworld. Each of these ventures sought to build further links with operators around the globe in anticipation of competing to provide a one-bill bundle of services to customers around the globe. All that has survived of the major global alliances of the mid-1990s are the brand names that they established. Competition has instead primarily developed in different directions. One direction is toward vertical industry segmentation. The Internet – meaning networks that can be connected using a particular set of globally standardized data networking protocols – is developing to provide a global platform for service competition among a wide range of independent companies. Another direction of competition is toward building wholly owned end-to-end networks among major global business centers. Such an ownership structure provides major advantages for rapidly implementing new network capabilities and rolling out services that require such capabilities. The failure of major global telecommunications alliances highlights the rapid change and uncertainty in the telecommunications industry. Economic analysis cannot eliminate this uncertainty or provide a fail-safe means for predicting the future. However, analysis of the economics of the telecommunications industry and the responses of firms and policymakers...

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