Change, politics and determinist economics in Europe

What do our understanding of economic and market realities and our experience tell us is the likely outcome of current reforms of telecommunications in Europe? The history of liberalisation in the US and UK illustrates the need for continuing regulatory intervention to secure competitive entry and failures when plans are proposed for adopting fixed, determinist models of 'open' or 'level playing field' competition. Strong, interventionist regulation, and readiness to alter the approach flexibly in the light of commercial impacts has proved necessary. The US and UK have failed to learn from one another's mistakes, particularly in the fields of local access funding and interconnect pricing. The European regulatory package which came into operation on 1 January 1998 exhibits similar errors, compounded by the open texture of the legislative framework adopted. A similar framework has largely collapsed in the United States in the last two years. A more empirical, less determinist view of the market model for Europe and a more flexible, more centralised regime will be required.