Regulation and the Evolution of the Global Telecommunications Industry
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Regulation and the Evolution of the Global Telecommunications Industry

Edited by Anastassios Gentzoglanis and Anders Henten

After decades of liberalization of the telecommunications industry around the world and technological convergence that allows for increasing competition, sector-specific regulation of telecommunications has been on the decline. As a result, the telecommunications industry stands in the middle of a debate that calls for either a total deregulation of access to broadband infrastructures or a separation of infrastructure from service delivery. This book proposes new approaches to dealing with the current and future issues of regulation of telecommunication markets on both a regional and a global scale.
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Chapter 8: From the Pursuit of Efficiency to the Pursuit of Competition in New Zealand’s Evolving Telecommunications Market

Bronwyn Howell


1 Bronwyn Howell INTRODUCTION 8.1 From an economic perspective, efficiency is the defining performance benchmark for any industry or sector – not least telecommunications. Consequently, the primary normative objective of law-and policy-making is the promotion of economic efficiency (in both its static and dynamic forms) via the elimination of market inefficiencies (Schmalansee, 1981; Kahn, 1970, 1975). A minority of economists, and many consumer advocates, propose the use of law- and policy-making powers principally as a means of achieving distributional objectives, independent of their effects upon total efficiency (for example, Feldstein, 1972a, 1972b). However, in practice it is extremely difficult to achieve desired distributional outcomes through laws and policies (Schmalansee, 1981), and attempting to do so may well be counterproductive (Kahn, 1975; Peltzman, 1976). Furthermore, because distributional objectives are highly subjective, it is very difficult to adjudge the ‘successes’ of any distribution-motivated intervention. By contrast, efficiency is an objective measure that provides a useful benchmark for the economic assessment of law- and policy-making performance. Even if redistribution is a primary consideration, the Kaldor–Hicks criterion requires efficiency gains sufficient that the winners from a law or policy change could compensate the losers and still be better off relative to the status quo (Connolly and Munro, 1999). Competition is one important means of increasing both static and dynamic efficiency; another is regulatory intervention. Although intervention undoubtedly has many potential pitfalls, its use may be justified in industries where pursuit of competition (in the form of many market 167 168 Regulation and the evolution...

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