Rivalrous Telecommunications Networks With and Without Mandatory Sharing

Abstract:     
The 1996 Telecoms Act featured policy successes and failures. Among the former are federal rules pre-empting state monopolies and the mandate for network interconnection. Among the latter is the mandatory sharing regime for fixed line telephone networks, over-turned by federal courts after eight years. Such regulation required delicate balancing in order to encourage competitive entry while simultaneously protecting investment incentives for new or existing service providers. Fortuitously, the emergence of competing voice and data networks has proceeded - not due to such rules, but despite them. Evidence indicates that wholesale price controls did not provide a "stepping stone" to facilities-based competition, while the elimination of such rules has. Marketplace experience suggests that competitive networks most likely develop not from "opening" existing delivery platforms to multiple operators, but from policies nurturing the development of rival infrastructure in adjacent markets or the adoption of alternative technologies. Foremost among these are policies to encourage investment in broadband and wireless communications networks.

Keywords: telecommunications, act, 1996, mandatory, sharing, rivalrous

JEL Classifications: H00

Working Paper Series