ABSTRACT
The communications industry has always been the best example of the power of direct network effects. Mr Vail, the President of AT&T at the early the twentiethcentury, understood that the value of a telephony network depends on the number of connected users. A network connecting all users, a universal network, would raise to dominance betting the numerous competitors in the market. He also understood that such dominance would require regulatory control, so he promoted the regulation of his telephony monopoly. His successors in AT&T were not as fast as him in recognizing that the internet, empowering the connection of humans and computers, would multiply the network effects. The FCC was faster to realize that a communications monopoly would delay the development of the internet, and as a consequence, it favored the deregulation of the industry, leading to the break-up of the AT&T monopoly. However, competition in telecommunications was made possible by the regulatory obligation to interconnect all the telephone networks: network effects to ensure interoperability. Network effects would not be monopolized, but shared by all players.
