Competition and 'Local' Communications: Innovation, Entry and Integration

This paper suggests that the imminent introduction of new localaccess competition using existing and new technologies shouldend any possibility of a natural monopoly in local exchange.The paper questions whether the fundamental economics of thelocal exchange really require regulation of local telephoneservice rather than the narrow regulation of interconnection.It also points out that technological development is sharpeningcompetitive forces in practically all aspects of telecommunications.Moreover, the willingness of some local exchange providers tounbundle has laid the foundation for a further rollback of regulationin areas of the USA. Finally, the paper contends that regulatorylags require that regulation take a forward-looking perspectiveand attempt to deal with the industry as it will be, not asit was.