Abstract
Purpose – The liberalization of European telecommunications has been expressed in highly concentrated markets with several major players at the pan-European level. Instead of fostering competitive marketplaces, the reform has created an oligopolistic landscape with powerful private corporations. This induces reasonable questions about the real objectives and the chosen ways of the reform.
 Methodology/approach/design – The deregulatory movement in the telecommunications sector is analyzed through contrasting perspectives of the public interest approach and public choice theory.
 Findings – The chance to change the landscape of the industry has been missed, and the current trend towards the global oligopolistic marketplace yields an unprecedented amount of economic power to narrow groups at the global scale. The liberalization movement introduced market mechanisms in the industry, but the real free and open market has never been formed, and it is possible to assert that it has never been among the real objectives and intentions of the policymakers.
 Originality/value – The recent surge of “liberalization” in the telecommunications industry speaks rather in favor of the hypothesis of vested private interests in the policy and that they have always been greatly covered by the sauce of public interest justifications. The case of telecommunications shows that ideas and understanding of economic phenomena played an important role in adoption of regulatory regimes, and it is apparent that people on the top of the social pyramid have opportunities to pick up and foster those ideas that better fit their private needs.
Highlights
The nature of state interventions into economy might have different explanations, and two opposite extremes are public and private interests (Buchanan and Tullock 1962; Laffont and Tirole 1991)
It might be argued that the public interest approach gives a strong explanatory basis for liberalization of the telecommunications industry, especially if we look at the results
This is the period of uncertainty, of entrepreneurial risks, of trials and errors that characterize the market process. This is the period of empty fields and unsatisfied demand that open opportunities and create incentives for newcomers and discipline the leaders if they feel threats for their positions. This period occurred in the 1990s-2000s and in many territories around the world, including European countries, the chance to create a real competitive market that could play for broad public interests and that could function without government support and regulation was missed due to the chosen policy of liberalization and deregulation
Summary
The nature of state interventions into economy might have different explanations, and two opposite extremes are public and private interests (Buchanan and Tullock 1962; Laffont and Tirole 1991). Public choice theory, developed in the 1960s, has promoted the opposite view at public policy and underlined that the main driving force of political decision-making processes is private interests of individuals (Peltzman 1989; Buchanan and Tullock 1962; Tullock, Seldon and Brady 2002). The article begins with a brief review of public and private interest theories of regulation. After that, it examines the applicability of these theories to the liberalization reform of the telecommunications industry. The paper examines alternatives that could be adopted by the regulators, arguing that these alternatives fit the concept of public interest, and analyzes why this choice has not been made
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