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Efficiency and Growth of the Telecom Industry

In: Efficiency, Market Dynamics and Industry Growth

Author

Listed:
  • Jati Sengupta
  • Phillip Fanchon

Abstract

The telecommunications industry has evolved rapidly in the last two decades, when the maturing wireless technology sharply eroded the dominance of fixed-lines providers. The decline in market share of fixed lines has been especially strong in countries where the traditional cable infrastructure was not well developed. Three interacting forces drive the transformation of the industry: (1) Market structure and deregulation, (2) innovation, and (3) capital expenditures by the firms. Stimulating competition can increase market efficiency as a more competitive market stimulates the degree of innovation undertaken both by incumbents and by entrant operators. Vast arrays of telecommunications policies throughout the world affect the dynamics of entry through the control of network availability and connection charges. Regulating agencies can affect market prices, and consequently influence both profits and the incentive to invest in R&D and equipment. The sharp interest in the interaction between these forces has generated a voluminous literature. In particular, Laffont and Tirole (2000) provide a comprehensive overview of the main issues in the economics of the telecommunications sector.

Suggested Citation

  • Jati Sengupta & Phillip Fanchon, 2009. "Efficiency and Growth of the Telecom Industry," Palgrave Macmillan Books, in: Efficiency, Market Dynamics and Industry Growth, chapter 6, pages 138-160, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-24866-3_6
    DOI: 10.1057/9780230248663_6
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