FINISHING THE JOB OF TELECOMMUNICATIONS REFORM IN NEW ZEALAND Comments on Commerce-Treasury’s Discussion Paper
نویسنده
چکیده
0. Summary of Argument The root cause for the persistent lack of progress toward competition in New Zealand telecommunications can be found in Telecom's origins: privatization and deregulation created a de facto monopoly; Telecom's monopoly is sustainable against competition despite the disappearance of natural monopoly conditions throughout telecommunications markets; Grants of monopoly are economically beneficial in some circumstances, but those conditions no longer prevail in telecommunications; The presence of network externalities and user switching costs, alone and in combination, can permit incumbents to exclude innovative entrants who are unable to achieve economies of scale; Due to network externalities and the rapid pace of technical change in telecommunications, dominance is especially detrimental to economic welfare; The portion of Telecom's economic profits derived from its de facto monopoly does not serve the purpose of promoting dynamic efficiency; A close analogy exists between intellectual property protection of computer software and monopoly provision of telecommunications bottleneck services, where in both cases a little monopoly power can be extremely harmful; What is needed is a " level playing field " that restores ex ante efficiency in the allocation of production, a situation approximating the formation of the cellular and cable industries in New Zealand; Legislation is needed that completes New Zealand's reform of telecommunications by de-monopolizing Telecom while preserving the " light handed " approach to regulation;
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