Regulation and deregulation of telecommunications: the economic and political realities. Part I: The United States

Abstract

Telecommunications in the information society has evolved into a multifaceted industry of great commercial value and significance. Indeed, it has become a multi-billion dollar in dustry with a projected worldwide turnover of over $540 billion by the year 1990. Telecommunications has also emerged as the obvious electronic highway for the transmission of information in a multiplicity of formats. Probably as a direct response to the commercial success and changing role of telecommunications, a number of developed countries includ ing Japan are either privatizing or liberalizing their respective telecommunication networks. Whilst deregulation is a new concept for most countries, the United States, as part of her policy of encouraging open competition and free enterprise, has traditionally operated the most deregulated telecommuni cations in the World. Despite this, her telecommunications industry was, until recently, dominated by AT&T which was probably the world's largest privately owned business. The divestiture of the company during the early eighties coupled with the trade concessions have enabled many of its rivals—notably MCI—to gain a significant foothold, particu larly in the lucrative long-haul sector. In the first part of this series of papers, we examine not only the theoretical issues in liberalization but also the benefits, politics, economics and consequences of deregulation in the light of the American experience. Obviously there are a number of lessons which the rest of the World can learn from the US and these are considered towards the end of the paper.