The Evolution of 'Competition': Lessons for 21st Century Telecommunications Policy

Abstract

Assessments of competition or the lack thereof have been central to the evolution of public policy toward the telecommunications industry for over a century. This centrality continues today. Even so, numerous basic and profound questions persist regarding the definition and measurement of competition, as well as appropriate institutional oversight mechanisms for competition policy. In this paper, we chronicle the evolution of the “competition” concept in economics and also examine how “competition” has been defined in the communications policy arena. We find that the academic literature on competition hits an important inflection point in the mid-twentieth century with the development of the concept of “workable competition,” a term later equated to “effective competition.” Through careful examination and analysis of historical FCC regulations, we find that while the concept of “effective competition” is central to policy formation at the FCC, the Commission’s own applications of “effective competition” are inconsistently applied. Given the centrality of this concept, and its inconsistent applications to date, we draw upon the seminal contributions to the development of the notion of “effective competition” to proffer a straightforward and robust modern definition that we believe is suitable for application in twenty-first century communications markets.