Will competitors be allowed to compete? The regulation of long-term contracts in the telecommunications industry

Andrew N. Kleit, Dennis L. Weisman

Research output: Contribution to journalArticle

Abstract

The US telecommunications industry is on the brink of profound change. Firms and regulators are now fighting over how that change will take place. All of these battles will touch upon a crucial question: how will competitors, especially incumbent providers, be allowed to compete? In particular, a battle is brewing over whether incumbent providers can offer customers long-term contracts. Conceivably, such contracts may have anti-competitive consequences. However, the theory of contracts as anti-competitive instruments has several necessary conditions. A review of those conditions, and application of them to the telephone industry, indicates that such contracts do not meet these conditions. In addition, long-term contracts have the potential to aid consumers in numerous ways. Given this, calls to regulate such contracts can be seen as anti-, rather than pro-, consumer. We therefore urge regulators to focus on protecting competition, rather than competitors.

Original languageEnglish (US)
Pages (from-to)441-447
Number of pages7
Journalinfo
Volume1
Issue number5
DOIs
StatePublished - Jan 1 1999

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development

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