Explicating barriers to entry in the telecommunications industry (original) (raw)
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Barriers to Entry Analysis of Broadband Multiple Platforms: Comparing the U.S. and South Korea
This paper compares barriers to entry in the broadband markets between the U.S. and South Korea. First, it explores economic conceptions of barriers to entry from the economics literature. Second, it speculates on how the conception of barriers to entry has been dealt with in the telecommunications industry. It clarifies the various industrial factors that could prevent, or make it difficult, to successfully enter the residential telecommunications market. Third, it introduces an analytical framework that can be adopted for evaluating the barriers to entry. Fourth, employing that framework, it examines the broadband markets in the U.S. and in South Korea, focusing on barriers to entry in multiple broadband access platforms. Both the U.S. and South Korea have shown greater barriers to entry in wireline broadband markets such as cable modem and DSL compared to wireless broadband when it comes to a facilities-based entry. South Korea has offered more opportunity to non-dominant ISPs as new entrants and thus, has been able to facilitate more vibrant competition nationwide. This paper concludes with an analysis of the barriers to entry for alternative broadband access platforms in residential high speed Internet services, more specifically, wireless access technologies, including other economic and policy factors in the US and South Korea. The sluggish progress of intermodal and intramodal market competition explains a part of the sluggish demand in the residential high speed Internet access market in the U.S., while the South Korean market was able to grow rapidly due to fierce competition in the market, mostly facilitated by the Korean government’s open access rule and policy choices more favorable to new entrants rather than to the incumbents. Furthermore, near monopoly control of the residential communications infrastructure by cable operators and telephone companies manifests itself as relatively high pricing and lower quality in the U.S. The more favorable terms from which the dominant providers have benefited, and government’s deregulation, may limit business opportunities for other Internet service providers.
Paper submitted to the ITS European Regional Conference, 1997
The paper uses transaction cost economics to analyze the institutional determinants of entry in the telecommunication market under different technological and market conditions. The empirical analysis examines how the regulatory design interact with market and technological conditions in determining the network design, and hence affect entry in telecommunications. In applying conventional entry models to the telecommunication market, the paper investigates the extent to which more “traditional” determinants of entry ...
Do Entry Conditions Vary over Time? Entry and Competition in the Broadband Market: 1999-2003
SSRN Electronic Journal, 2000
We extend Bresnahan and Reiss's (1991) model of local oligopoly to allow firm entry and exit over time. In our framework, entrants have to incur sunk costs in order to enter a market. After becoming incumbents, they disregard these entry costs in deciding whether to continue operating or to exit. We apply this framework to study market structure and competitive conduct in local markets for high-speed Internet service from 1999 to 2003. Replication of Bresnahan and Reiss's framework generates unreasonable variation in firms' competitive conduct over time. This variation disappears when entry costs are allowed. We find that once the market has one to three firms, the next entrant has little effect on competitive conduct. We also find that entry costs vary with the order of entry, especially for early entrants. Our findings highlight the importance of sunk costs in determining entry conditions and inferences about firm conduct.
Implications of New Technologies and Competitive Entry for Telecommunicationspolicy
New telecommunications technologies are changing the costs of traditional services and creating a wide range of new services which could be offered by incumbent local exchange companies, unregulated subsidiaries of regional companies, or by new entrants. Incentives for network modemization depend partly on regulatory policies, including DNA (open network architecture) and rate design. Policy responses to the competitive environment include partial deregulation and increased pricing flexibility, with price caps protecting "captive" customers." *This study began as part of a project for the Florida Public Service Commission (FPSC) on Telecommunications Costing and Pricing. It draws upon material originally prepared for the U. S. Congress's Office of Technology Assessment. That research addressed regulatory structures and the development of information technologies in rural America. For the purposes of the FPSC project, the analysis focused on the implications of technological developments for regulatory policies. David Sappington, Ben Poag, and Dennis Weisman prOVided helpful comments on an earlier draft of this study. The ideas expressed here do not necessarily represent those of sponsoring organizations.
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2011
This paper presents a model of competition between an incumbent and an entrant firm in telecommunications. The entrant has the option to enter the market with or without having preliminary invested in its own infrastructure; in case of facility based entry, the entrant has also the option to invest in the provision of enhanced services. In case of resale based
Access Regulation, Entry and Investments in Telecommunications
SSRN Electronic Journal, 2000
This paper presents a model of competition between an incumbent and an entrant firm in telecommunications. The entrant has the option to enter the market with or without having preliminary invested in its own infrastructure; in case of facility based entry, the entrant has also the option to invest in the provision of enhanced services. In case of resale based entry the entrant needs access to the incumbent network. Unlike the rival, the incumbent has always the option to upgrade the existing network to provide advanced services. We study the impact of access regulation on the type of entry and on firms' investments. We find that without regulation the incumbent sets the access charge to prevent resale based entry and this generates a social inefficient level of facility based entry. Access regulation may discourage welfare enhancing investments, thus also inducing a socially inefficient outcome. We extend the model to account for negotiated interconnection in case of facilities based entry.
Entry and competitive dynamics in the mobile telecommunications market
"We propose an extension of the Gans–Stern [Gans, J.S., Stern, S., 2003. The product market and the market for “ideas”: commercialization strategies for technology entrepreneurs. Research Policy 32 (2), 333–350] framework that includes entry by existing firms. An incumbent firm possessing complementary assets and strong appropriability is in a formidable position [Teece, D.J., 1986. Profiting from technological innovation: implications for integration, collaboration, licensing, and public policy. Research Policy 15 (6), 285–305]. However, a de alio entrant can leverage complementary assets to enter along a new technological trajectory, and then develop appropriability. We illustrate how several mobile telecommunications firms (Ericsson, Nokia and Samsung) pursued this strategy to catch up with the market leader (Motorola). We also identify several shortcomings in Motorola’s approach: it was too inward-looking in developing technologies, but ironically not inward-looking enough in exploiting its most valuable patents. Keywords: Patent citations; Knowledge flows; Mobile telecommunications; Intellectual property; Complementary assets"
Analysis of Market Competition in Telecommunications Business: Regulatory Perspective
IAEME Publication, 2016
Competition in the telecommunications market is beneficial to consumers in terms of efficiency improvements. However, it would be difficult for the efficiency of any regulations to be improved under the inefficient market with no competition. As a real, regulations are not always potentially effective and may sometimes be imperfect like the market itself. Accordingly, any regulator's decisions to interfere or any appropriate interfering approaches are considered very necessary and beneficial to consumers. Therefore, it is required that the competitive conditions in telecommunications must be studied and analyzed along with the impacts of telecommunications regulation on the whole industry, consumers, and service providers. This will enable the survey and study of the key indicators which have already been determined so as to point out the problems and obstacles caused from telecommunications operation and the entry of new operators into the market. This particular research will impart the explanation of tools used in analyzing telecommunications businesses, the definition of competitive conditions in markets as well as analyze the problems and barriers to market entry among operators, etc. As a result, telecommunications regulators must play a pivotal role in preserving competitive conditions in the telecommunications market in order to promote telecommunications services to be excellent, have reasonable prices, and give rise to innovations continuously.
Telephone company entry into cable televisionA re-evaluation
Telecommunications Policy, 1993
Even If all legal entry barriers were eliminated, telephone companies would face dim prospects for competing with cable televlslon operators In the transport of video services, at least during thls decade. This situation arises because the economic characterlstlcs of flbre-based Integrated broadband networks of Interest to telephone companles are not promlslng. Unless the demand for switched video Is strong, households will continue to be served separately by cable television networks and by swltched narrowband networks durlng the 1990s.