chapter  4
28 Pages

Competition in Local Telecommunications: Implications of Unbundling for Antitrust Policy

ByRobert G. Harris, Gregory L. Rosston, and David l. Teece

In the past two decades, competition has increased substantially in telecommunications equipment and interexchange services, through a combination of technological advances and changes in public policies. Innovations in microwave communications, for example, combined with the allocation of radio frequency spectrum (the "above 890" decision by the FeC), enabled Microwave Communications, Inc.-now MCI-to enter into interexchange services. More recently, technological innovations in fiber optics have stimulated additional entry into interexchange services. That process has been long and drawn out, in part because a sea change in public policy was required, from a belief that "the system is the solution" to the view that competition is the best method of providing quality services at lower prices. The waves of change-"gales of creative destruction," Schumpeter would say-are now hitting the beaches oflocal telecommunications, first through targeted competition from competitive access providers (CAPs), then through ubiquitous competition from cable systems and mobile communications.