Network Competition and Industry Structure

Abstract

The prevailing trend in the US telecommunications industry is toward industry convergence and market competition. This paper examines possible scenarios for developments in the telecommunications market as a result of further industry convergence and changes in the political and regulatory environments toward competition It studies the cost structures of the industry under a hierarchical layered network architecture framework and addresses some potential economic problems. Vertical and horizontal integration may be a natural outgrowth of competition in the converging industries The paper concludes with a call for clearer economic analysis of future market structure on behalf of public policy makers, particularly with regard to quantification of underlying Changes in consumers' purchasing behavior and providers' cost structure. Copyright 1996 by Oxford University Press.