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Tirole, Jean --- "Telecommunications and competition" [2004] ELECD 64; in Buigues, A. Pierre; Rey, Patrick (eds), "The Economics of Antitrust and Regulation in Telecommunications" (Edward Elgar Publishing, 2004)

Book Title: The Economics of Antitrust and Regulation in Telecommunications

Editor(s): Buigues, A. Pierre; Rey, Patrick

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843765103

Section: Chapter 14

Section Title: Telecommunications and competition

Author(s): Tirole, Jean

Number of pages: 7

Extract:

14. Telecommunications and competition
Jean Tirole

This chapter is in two sections. The first and shorter one will go through a series of
institutional remarks on the role of antitrust in telecoms.
The second and more substantial section will discuss the economic challenges that com-
petition authorities face in the industry, with an emphasis on innovation, IP (intellectual
property) and co-operation among competitors.


1. INSTITUTIONAL ISSUES

1.1 Does Antitrust Have a Role in Telecoms?

The answer, I believe, is a qualified yes. For one thing, regulation may not exist, at least not
in its modern understanding (Germany, in a number of industries, is a case in point). In
addition, regulators may lack expertise in competition issues or may be captured by the
industry, in which case competition authorities bring some checks and balances into the
system. Another reason why I feel that the role of competition policy in telecoms will
continue to expand is that technology is moving fast. Rapid technological progress makes it
difficult for regulators to issue detailed ex ante regulations. To take an example, regulators
routinely control charges for access to old-fashioned local loops; regardless of the contro-
versies that the setting of such charges may raise, all of us will agree that things will not get
easier as more intelligence is brought into the networks and as technological alternatives
grow in number and quickly become obsolete. Large but hard-to-measure economic depre-
ciation associated with technological progress and substantial demand uncertainty will ...