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The Co Evolution Of Market Structures And Regulatory Regimes In Electronic Communications

1671 words - 7 pages

Introduction The regulatory transformation of electronic communications, which is recently being urbanized within the EU, highlights a number of issues, which have been discussed in recent years by the regulators of countries that are ahead in the deregulation process, such as the US and the UK. In these countries, authorities claimed their reliance in a speedy and absolute transition from a heavy-handed regulatory regime to the exclusive use of competition policy rules. The regulators’ statements were nevertheless accompanied by extensive interventions, which were intended to rule the complex interactions among operators associated with liberalization. The necessity of these interventions is well illustrated by the conceptual framework proposed by Bergman: when moving away from monopoly, the regulatory activity first grows, and then decreases when the market becomes adequately competitive. A stable competitive industry must be developed in order to allow the implementation of competition policy rules. In the opposite case, there are no feasible alternatives to regulation and it should be verified whether the role of regulation is temporary (i.e. consists in removing obstacles to effective competition) or permanent (since effective competition cannot be sustained). Facility-Based Competition Generally, the advancement of the regulatory framework in electronic communications can be interpreted as a response to the increase in the range and substitutability of the offered services, network flexibility and, therefore, in the scope for a competition based on differentiated infrastructures. Network Competition in the New European Regulatory Framework The fundamental points of the new European regulatory framework can be summarized as follows: The possibility to entail, maintain or withdraw regulatory requirements in a given market is conditional upon the outcome of an economic analysis about its degree of competition in a specific geographical area; Operators enjoying significant market power (with particular reference to access and interconnection) are subject to stricter obligations; It is acknowledged that dominant positions can be jointly attained by two or more firms (joint-dominance), and that a firm can extend its supremacy to other markets through vertical integration; A distinction is made between regulatory issues regarding infrastructures and information transmission services and those connected to content-based services; A technically neutral approach is adopted, which is applied homogeneously to all infrastructure and (complementary or substitutable) bidirectional or diffusive services.. Local Loop Unbundling and Market Structure The most significant provision included in the European regulatory framework, following the Regulatory Review 1999, is the obligation concerning the unbundling of the local loop. This policy option allows entrants to swiftly introduce new technologies and services (in particular, multimedia and broadband...

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