Convergence and Competition: Technological Change, Industry Concentration and Competition Policy in the Telecommunications Sector

Arlan Gates

ABSTRACT

This article explores the impact of technological convergence and the response of business to the phenomenon on competition in the telecommunications sector. As new technologies increasingly facilitate services that bridge the sectoral and regulatory boundaries of telecommunications, broadcasting, and the Internet, they simultaneously foster a convergence of the underlying delivery mechanisms and a divergence of standards and consumer devices used to access them. The opportunities inherent in this uncertainty ought to promote competition. Instead, the business response to technological convergence has often involved the consolidation of corporate strength through horizontal and vertical integration. Concentration within and among the industries involved in technological convergence increasingly creates the potential for anti-competitive behaviour and therefore raises doubts about the possibility of achieving the multilateral competition policy objectives adopted for telecommunications in 1997 by the World Trade Organization. This article analyses on four levels the impact of convergence on competition. First, it addresses the conceptual separation between telecommunications and other industries in both multilateral policy-making and in domestic regulation. Second, it analyses the conflicts between competition policy and other domestic regulation in the sectors at the centre of technological convergence: telecommunications and broadcasting. Third, it explores the conflicts created by the need to maintain the regulation of traditional communication services while simultaneously regulating new services made possible by converging technologies. Finally, it assesses the role of technological convergence in arguments surrounding the reduction or elimination of foreign ownership restrictions as a means to promote global competition in telecommunications. The article concludes that competition policy must be applied across sectors and national boundaries if its benefits are to be fully realized and threats to competition avoided.

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Citation: (2000) 58(2) U.T. Fac. L. Rev. 83.
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