Chapter 2 - Competition and Regulation—A Continuing Telecommunications Cycle

Abstract

This chapter provides information on the background of the various issues considered by the telecommunications industry and the rationales behind the solutions that were applied to each issue enables us to sort through which options succeeded and were retained, or failed and were rejected. This information provides a richer context in finding appropriate solutions to current and future issues. The chapter describes why the United States and other countries regulate industries, such as telecommunications. It notes the trend in many industries to start with several pioneering companies competing against one another and then, to have one or two companies take control of the industry, imposing high prices on restricted products to the detriment of consumers. Finally, the efforts of the government to control these dominant companies through regulation and antitrust actions have also been discussed. The specifics of this trend in the communications industry is expanded and the path from vibrant competition early in the telegraph and telephone industries is traced through the rise of the American Telephone and Telegraph Company (AT&T) and the Bell System to dominance, and the various efforts of the government to control this dominance. This discussion describes the resulting separation of the voice, data, and video portions of the industry that still exists today, and the cost controls that still define the industry. These converged technologies provide both unique options and conflicts for regulators defining the issues being considered by the industry today.