Expanded competitiveness and regulatory safeguards in local telecommunications markets

Article Abstract:

Changes in the telecommunications market environment indicate that there is no longer any need for the line-of-business restrictions on the regional Bell operating companies (RBOCs). Technological innovations such as fiber optics, wireless access and digital computing and electronics have brought in new entrants into the market. These new entrants, coupled with regulatory actions that have lowered entry barriers, have changed the structure of the telecommunications market. Furthermore, continuing regulatory safeguards ensure limitations of market power in areas not yet subject to competition.

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Realignment in telecommunications

Article Abstract:

Development in technology and consumer demands have made realignment, specifically vertical integration, among the firms in the telecommunications industry a winning strategy. Vertically integrated companies producing bundled telecommunications packages demanded by consumers have the edge over disintegrated companies that offer piecemeal parts, which the consumers have to assemble and control themselves. The stockmarket reaction to merger announcements is quite positive as shown by the AT&T-McCaw. The regional Bell operating companies, on the other hand, had shown negative price declines.

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The regulation of vertical relationships in the US telecommunications industry

Article Abstract:

Regulatory prescriptions usually result in hidden costs which do not get quantified until the regulations are rescinded. At the time that the line-of-business restrictions by the Modification of Final Judgment (MFJ) took effect in 1984, telecommunications equipment could be divided into distinct categories. However, a decade later, advancements in semiconductor technology have blurred the vertical distinctions. The MFJ distinctions and restrictions prohibit vertical alliances which hinder further innovations and competition in telecommunication services and equipment supplies.

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