CRTP-9

"Competition and 'Local' Communication: Innovation, Entry and Integration"

Gregory L. Rosston and David J. Teece 
June 1995

This paper suggests that the imminent introduction of new local access competition using 
existing and new technologies should end any possibility of a natural monopoly in local 
exchange. The paper questions whether the fundamental economics of the local exchange 
really require regulation of local telephone service rather than the narrow regulation 
of interconnection. It also points out that technological development is sharpening 
competitive forces in partically all aspects of telecommunications. Moreover, the 
willingness of some local exchange providers like Ameritech and Rochester Telephone to 
unbundle has laid the foundation for a further rollback of regulation in areas of the 
United States. Finally, the paper contends that regulatory lags require that regulation
take a forward-looking perspective and attempt to deal with the industry as it will be,
not as it was.