Compatibility Standards and the Market for Telecommunications Services

Abstract

Abstract Not so long ago, technical standards in the United States telephone industry were determined primarily by the American Telephone and Telegraph Company. To be sure, AT&T had to coordinate with foreign telecommunications entities, independent telephone companies, and the United States Department of Defense, but the degree of coordination was relatively minor, and AT&T had substantial latitude in deciding on the standards that would be used. However, three forces have caused this situation to change dramatically. First, because of the entry of large numbers of competing suppliers of equipment and services into the United States telecommunications industry, standard setting has moved from the technical concern of a single firm to a factor with important implications for competition. As a result, the processes by which standards are set are now subject to detailed scrutiny by both the regulatory authorities and the courts. In a sense, telecommunications standards have become too important to leave their determination solely to the telephone companies.