Competition Policy for the Telecommunications Industry a Guide for Policymakers

20 years of experience in the areas of government regulation, competition policy and business strategy. He has testified in numerous regulatory proceedings to the economic and social impacts of regulatory policies and has served as an economic consultant to Fortune 500 Corporations and regulatory commissions on economic pricing principles, the design of incentive regulation plans and competition policy. His primary research interests are in strategic behavior, government regulation and antitrust. The author or co-author of more than 75 articles, books and book chapters, his work has appeared in the He also serves on the academic advisory board for the Institute for Regulatory Law and Economics, which is housed at the Progress and Freedom Foundation. Over the past year, Dr. Weisman has served as a member of the regulatory framework group for the Digital Age Communications Act (DACA) project. The purpose of this project is to draft model telecommunications reform legislation for the United States. Dr. Weisman received his Ph.D. in economics from the University of Florida. The KU School of Business established the Center for Applied Economics in February of 2004. The mission of the Center for Applied Economics is to help advance the economic development of the state and region by offering economic analysis and economic education relevant for policy makers, community leaders, and other interested citizens. The stakeholders in the Center want to increase the amount of credible economic analysis available to decision makers in both the state and region. When policy makers, community leaders, and citizens discuss issues that may have an impact on the economic development potential of the state or region, they can benefit from a wide array of perspectives. The Center focuses on the contributions that markets and economic institutions can make to economic development. Because credibility is, in part, a function of economic literacy, the Center also promotes economics education. The primary objective of this manuscript is to articulate a set of economic principles to assist policymakers in their deliberations on the issue of deregulation in telecommunications markets. The key question confronting policymakers concerns when the discipline imposed by competition can substitute for the discipline imposed by regulation. The complexity of this question is exacerbated by the technological dynamics of the industry: The product market is being redefined, " rents from incumbency " are considerably diminished and market share mea-sures—recognized to be unreliable indicators of market power, particularly in regulated industries—are at best …