Competition in the local loop: Towards an anticyclical competition policy in telecommunications

Abstract

This paper investigates which governmental policies are most suitable for creating an innovative telecommunications market at the local level, focusing on the relation between the local telecommunications network and local CATV networks. Regulatory policies must put more emphasis on competition instead of stimulating specific technological innovations. There is a need for an anticyclical competition policy which will enhance competition if the telecommunications market is insufficiently innovative and restrict competition if the market becomes extremely detrimental to innovation. The regulatory model to be applied to the local loop should not be the common carrier model, but rather the press model of regulation, providing free entry for all network operators and information suppliers to the telecommunications market.