Competition in communication networks: Pricing and regulation

By any measure, the communication sector is important. It is no surprise, t hen, that the communication sector has attracted the attention of both poli cy-makers and economists. In this paper, we argue that four characteristics of the networks that deliver communication services make this area of part icular interest. We analyse the implications of networks' cost structures; the strong complementarity between their components; the demand-side extern alities that arise from consumption of their services; and the social oblig ations attached to them. Despite the attention that the communication secto r has received, many aspects of competition between networks are still poor ly understood. We identify some of the key issues that will continue to tro uble regulators and interest academics.