Telecommunication: the Case of the United States of America

COMPETITION POLICY IN TELECOMMUNICATIONS:

THE CASE OF THE UNITED STATES OF AMERICA

As the 21st Century gets under way, the global telecommunications sector is struggling with uncertainties. In many countries, governments are only now emerging from a paradigm shift in which telecommunications

has, for the first time, come to be seen as a market-driven industry rather than a national utility. Everywhere, it seems, governments are struggling to strike a balance between allowing markets to function without interference, where possible, and interfering to correct market dysfunctions, where necessary. In the United States, the difficulties of market regulation are complicated by the lingering effects of an economic recession that has struck particularly hard at communications industries. Moreover, government and industry alike are coping with the fallout of corporate governance scandals affecting many of the major players in these industries. The year 2002 will likely be remembered as one of flux and difficulty for the industry—particularly in the United States. Yet for many reasons, the United States remains an important subject for a case study on competition policy. The country has a century-long tradition of antitrust law enforcement, and nearly as long a tradition of sector-specific regulation. Within that context, the United States has been pursuing competition as a stated policy goal for longer than many other countries. U.S. policy-makers have well-articulated policies on market entry and asymmetrical regulation, for example, that date back to the early 1980s.

In 1899, AT&T reorganized and became the parent company of the vertically integrated Bell System, which provided both local exchange service and long distance service. That same year, some of the more than

3,000 small independent carriers attempted to set up a rival long-lines network but failed for lack of capital. The Bell System at this time began a process of buying up independents,...