Telecommunication Markets. Drivers and Impediments

The last decade has seen a large wave of deregulation in telecommunications markets. Liberalization is also taking place in other network industries which were originally organized as monopolies, such as railway, electric power and natural gas. These industries share a common characteristic. An incumbent, which often is a formerly state owned company, is the sole proprietary of a network. When the industry is opened to competition, entrants buy access to the network infrastructure of the incumbent and are therefore enabled to provide the same or a somewhat differentiated product in the market. Hence it is believed that competition in the market will increase, which should lower prices, and in turn, increase consumer surplus.