Competition in communication networks: Pricing and regulation

1. Introduction By any measure, the communication sector is important. The combined revenues of the U.S. telephone and postal industries are larger than military spending for that country, and almost three times higher than the revenues of the airline industry. (Table 1, taken from Odlyzko (2000), gives further comparisons.) The sector has been expanding for many centuries. The postal service accounted for 0.02% of the U.S. gross domestic product (GDP) in 1790, now it accounts for around 0.7%; the number of pieces of mail per person per year has risen from 0.2 to 733 over the same period. The telephone industry has grown from 0. for these and many other fascinating statistics about communication.) Innovations such as mobile telephony and the Internet promise to continue the remarkable growth of this sector.