Local Telecommunications Services Research Articles

The history of privatization and re-privatization of PJSC Ukrtelecom

The privatization of strategic assets, which was announced last year, has not yet begun. In 2018, the State Property Fund of Ukraine plans to bid 893 enterprises for privatization and receive UAH 22.5 billion from privatization. One of the reasons is that it is difficult for potential investors to understand the legal framework and the conditions in which the entire law enforcement system operates. The purpose of the study is to identify the main problems, obstacles, mechanisms of privatization of state-owned enterprises on the basis of the historical analysis of privatization and re-privatization of PJSC “Ukrtelecom”, which is a typical example of privatization of large strategic objects of the country.The article discusses the history of privatization of state-owned enterprises, in particular the advantages and disadvantages of the decision to re-privatize the strategic object of Ukrtelecom PJSC and the reasons for the return to the state ownership of a stake in the enterprise. A comparative analysis of the company development indicators, including the number of staff and the volume of local telecommunication services and Internet services from 2007 to 2018, was found. Privatization did not help to increase the efficiency of the company, but its indicators are steadily decreasing. Thus, in 2007, the company employed 105 thousand people, and in 2018 - 25 thousand people. The volume of services is also steadily declining. Also, the owner does not invest in the company, which was a condition for privatization. Failure by the new owner of social and other obligations, which may be grounds for re-privatization of the company.Despite numerous attempts to oblige investors to fulfill their commitments, the company continues to be in a state of contraction. But attempts at re-privatization have not been implemented at this time. The analysis showed that in times of fighting in the country, the investment climate is unstable and volatile, the issues of re-privatization should be approached with caution. Thus, the re-privatization of Ukrtelecom may adversely affect the investment flow in Ukraine, and this negative factor may affect the plans of the Cabinet of Ministers of Ukraine for large-scale sale of state assets, creating so-called "image losses" of the country.

Perspectives on Inclusive ICT Business by BT

BT is one of the world's leading providers of communications solutions and services operating in 170 countries. Its principal activities include the provision of networked IT services globally; local, national and international telecommunications services to customers for use at home, work and on the move; broadband and Internet products and services and converged fixed/mobile products and services. BT consists principally of four lines of business: BT Global Services, Openreach, BT Retail and BT Wholesale.

Hit and Miss: Leverage, Sacrifice, and Refusal to Deal in the Supreme Court Decision in Trinko

Under the rules of the Telecommunications Act of 1996, incumbent local exchange carriers, including Verizon, were obligated to lease parts of their local telecommunications network to any firm at cost plus a profit prices which could combine them at will, add retailing services and sell local telecommunication service as a rival to the incumbent. AT&T, an entrant in local telecommunications, leased parts of Verizon's network. Trinko, a local telecommunications services customer of AT&T, sued Verizon alleging various anti-competitive actions of Verizon against AT&T, including that Verizon raised the costs of AT&T, its downstream retail rival. The Supreme Court held that Trinko's complaint failed to state a claim under Section 2 of the Sherman Act, and dismissed the complaint. I argue that Verizon had two monopolies in local telecommunications: a monopoly of the local telecommunications network, as well as a monopoly in retail services. The 1996 Act allowed for competition in retail services and also imposed cost-based pricing on leases of Verizon's network. Verizon, unable to increase the lease price on its network, reverted to raising-rivals-costs strategies against its retail competitors. Thus, Verizon used its monopoly of the network infrastructure to disadvantage entrants in retail. In doing so, Verizon lost short term profits that it would have earned from leasing its network to entrants, since the 1996 Act had set the lease price at cost plus reasonable profit. Thus, Verizon is liable if the principle is applied. According to the sacrifice principle, a defendant is liable if its conduct involves a sacrifice of short-term profits or goodwill that makes sense only insofar as it helps the defendant maintain or obtain monopoly power.

Vertical Leverage and the Sacrifice Principle: Why the Supreme Court Got Trinko Wrong

Trinko, a local telecommunications services customer of AT&T, sued Verizon for anti-competitively raising the costs of AT&T, its rival in the market for local telecommunications services who, pursuant to the rules of the Telecommunications Act of 1996 was leasing parts of the local telecommunications network (unbundled network elements, UNEs) from Verizon at cost plus reasonable profit prices. The Supreme Court held that Trinko's complaint failed to state a claim under Section 2 of the Sherman Act, and dismissed the complaint. I argue that the Court drew incorrect inferences from its Aspen Skiing decision. The Court also missed a key vertical leveraging issue in Trinko. Verizon leveraged its monopoly of local telecommunications network infrastructure by raising the costs of rivals in retailing services who leased unbundled network elements from it as well as decreasing the quality of their services so that such rivals were disadvantaged. Verizon used such actions that raised the costs and/or decreased the quality of rivals in retailing services aiming to preserve its traditional monopoly in the local telecommunications services market which was challenged by the opening of competition mandated by the Telecommunications Act of 1996. In doing so, Verizon caused a lower number of leases of unbundled network elements from itself to retailing rivals, and thus incurred a revenue sacrifice. Therefore the actions of Verizon in raising the costs of retailing telecommunications services rivals are an indication of liability according to the proposed in the Government's brief in Trinko, according to which a defendant is liable if its conduct involves a sacrifice of short-term profits or goodwill that makes sense only insofar as it helps the defendant maintain or obtain monopoly power, even though the sacrifice principle defines a stringent condition for a finding of liability.

Cooperatives in Bolivia: Customer ownership of the local loop

Cooperatives have been used by the inhabitants in rural areas to gain access to telecommunications. In Bolivia and Finland, for example, consumer cooperatives have been for many years the only mechanism to provide local telecommunication services to the whole country. This paper studies the effects of the Bolivian market's structure on the development of competition as well as on universal access and service policies. It argues that some cooperatives after the liberalisation of the market are not helping to develop competition. Cooperatives may have incentives to increase the interconnection charges that they receive from long distance firms to cross-subsidise the prices of local calls. Moreover, as some cooperatives have entered the long distance market, they may try to restrict competition through collusive agreements. Finally, the paper suggests that the excessive price of the cooperatives’ shares may have damaged the possibility of reaching a higher penetration level and greater coverage in rural areas.

Scale economies, technical change and productivity growth in Japanese local telecommunications services

This paper aims to examine the cost structure of local telecommunications services in Japan to provide measurements of productivity growth and a decomposition of this growth. We estimate a variable cost function using panel data on eleven regional telecommunications sectors of NTT for the 1992–1997 period. Total factor productivity (TFP) is measured on the basis of the estimated parameters, and the TFP growth rate is then decomposed into three sources: scale economies, technical change and capital adjustment. Our results reveal that the contributions of technical change to productivity growth are greater than those of scale economies and capital adjustment.

Is Structural Separation of Incumbent Local Exchange Carriers Necessary for Competition?

Although competitive local exchange carriers (CLECs) collectively have gained considerable market share since the passage of the Telecommunications Act of 1996, many entrants into local telecommunications have stumbled or failed. Some argue that competitive local telephony will eventuate only if the incumbent local exchange carriers (ILECs) place their wholesale and retail operations in structurally separate subsidiaries. By mid-2001, several states began proceedings on mandatory structural separation, and influential members of Congress introduced legislation mandating structural separation. In this Article, we analyze, and reject as unpersuasive, the putative benefits of mandatory structural separation. Such regulatory intervention is unnecessary to prevent discrimination against unaffiliated retailers of telecommunications services. Nor would mandatory structural separation lower wholesale discounts or increase the CLECs' market share. Plausible hypotheses for the CLECs' problems do not require the assumption of anticompetitive behavior by the ILECs. Apart from producing no discernable benefits to consumers, mandatory structural separation would entail a substantial social cost in terms of forgone coordination of investment and production and forgone economies of scope. Moreover, mandatory structural separation would harm consumer welfare and reduce resources for investment by facilitating an anticompetitive strategy by the ILECs' largest rivals to raise the ILECs' costs of providing local telecommunications services. Policy makers should reject proposals for mandatory structural separation of the ILECs.

A General Framework for Competitive Analysis in Wireless Telecommunications

A General Framework for Competitive Analysis in Wireless Telecommunications

Declaration of Telecommunication Services

[Extract] The access declaration process, instituted by the Telecommunications Act 1997, requires providers of declared telecommunication services to provide competitors with access to those services on fair and equitable terms and conditions. The Act vests the Australian Competition and Consumer Commission (ACCC) with the powers to declare a service in situations where declaration is deemed to promote the long-term interests of end-users. This paper examines the recent declaration of three local telecommunication services - local carriage service, local PSTN originating and terminating service, and unconditioned local loop service. When considering whether declaration will promote the long-term interests of end-users, s.1S2AB of the Trade Practices Act 1974 directs the Commission to consider whether declaration will: promote competition, any-to-any connectivity and 'the economically efficient use of, and economically efficient investment in, the infrastructure ...' (ACCC, 1999:6). This paper focuses on aspects of that declaration process arguing primarily that the ACCC has been asked to apply an inappropriate set of tests. The discussion notes that parts of the declaration test are exceedingly difficult to apply and that the sequential nature of the test makes it almost impossible to investigate the sensitivity of results to changes in initial assumptions. The conclusion reached in the paper is that the current tests for declaration should be revised. The paper also notes that cost-benefit analysis can, in theory, overcome many of the problems associated with the current declaration tests. This is not to say that cost-benefit analysis is perfect. It too, suffers from its own set of problems. Nevertheless, it may be able to substantially improve current declaration tests and those involved in the up-coming review.

Can local telecommunications be self-policing?: A proposed discovery procedure

Abstract To discover whether markets for local telecommunication services can be competitively self-policing, this paper advocates a comprehensive approach to policy making as opposed to a more piecemeal approach. The problem with a piecemeal approach is that the merits of particular policies are difficult to assess without reference to the total program in which they are embedded. What seems reasonable when considered along with other complementary policies may be unreasonable if undertaken in a different context. We describe the necessary conditions for an illuminating experiment that will both insure a fair test of competition's viability and afford adequate protections to the consuming public.

TELECOMMUNICATION EXTERNAL ECONOMIES, CITY SIZE AND OPTIMAL PRICING FOR TELECOMMUNICATIONS*

ABSTRACT. In this paper I make use of a city systems model to examine how telecommunications may affect cities in urban systems. The model offers an explanation for the observation that the share of employment in the communication‐intensive producer‐service sector increases with city size in the U.S. I suggest that external scale economies associated with metropolitan employment size, telecommunication network size and total number of intrametropolitan telecommunication contacts are possible explanations for this observation. I go on to suggest that the presence of telecommunication size and contact level external scale economies at the metropolitan level affects the optimal price that should be charged for local telecommunication services.

Hurricane Hugo: effect on state government communications

The impact of Hugo on state government communications in South Carolina and activities in the wake of the disaster are discussed. The state of South Carolina has been chosen, along with California, as a model state for development of the National Communications System/Telecommunications Services Priority (NCS/TSP) model plan for emergency restoration of telecommunications services. This effort is being undertaken in conjunction with the National Communications System Organization in Washington, DC. They are assisting the state in development of the telecommunications services priority (TSP) plan, to be used in the future for coordinating restoration of critical federal, state, and local telecommunication services. A private sector partnership has been initiated with the telecommunications and utility companies in South Carolina to provide fiber-optic alternate routing and other communications backup capability to each of the emergency preparedness offices in South Carolina counties in future disasters. An exchange of disaster recovery plans with other states has been undertaken. Information regarding each of these efforts is provided. >