Business Separation in Telecommunications: Lessons from the U.S. Experience
33 Pages Posted: 8 May 2009 Last revised: 29 Jun 2009
Date Written: June 23, 2008
Most countries are coming late to the debate over structural and functional separation in the telecommunications industry. In this paper, we examine experiences in the United States over the past 25 years with functional and structural separation of telecommunications service providers. We find that in some instances changing technologies and markets render most separation policies obsolete even before they are implemented. In other instances, the separation policy initially appears to be important and reasonable to implement, but proves to be of questionable value and unnecessarily complex. We also find that separation has delayed innovation and encouraged service providers to compete in the political and regulatory arenas. Even though equivalence is the commonly accepted goal, the U.S. experience shows it can be addressed in ways other than structural or functional separation, such as non-discriminatory interfaces. The U.S. experience is that behavioral rules, in the end, prove more effective and sustainable than separation remedies.
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