Telecom Industry: Competition, Interconnection Requirements, and the Need for Regulations

The word ‘competition’ in economic terminology means the independence of business actions opted by different sellers of the same product. However, in context of the telecom industry, the same word has opposite connotation-interdependence among competing service providers. The reason is that “the telecom system must work as a single system [because] users desire end to end services within an apparently ‘seamless’ communication network. They want connectedness and connectability” [Melody (1997), p. 53]. Therefore, to attract users, a new entrant in the industry, while intending to compete with the incumbent monopoly operator, has to ensure interconnection arrangements with the latter.