The Telecommunications Industry
There are many changes that occurred in the industrial organization of interexchange telecommunication services in the United States during the 1985-1995 period. Let's look at the general idea of Telecommunications. It is the two-way exchange of info in the form of voice or data messages between tow users at distinct geographic locations" (5, 7). The two-way exchange is now a numerous way exchange through the use of computers and the Internet. There are four important areas of the telecommunication industry in the United States. Technology plays a major role in telecommunications. Before technology, there was no such thing as telecommunications. During the ten year period there are some key advances in telecommunications due to technology. With growing technology, more companies want a piece of the action. There is a significant increase in long distance carriers and an increase in the size of these carriers. There is also a large influx in pricing and competition during this period. Another key factor in the success of the telecommunication industry is the regulations established for individual carriers and the industry as a whole. With the increasing size of the industry and the ma
States regulate prices for intrastate services, and the FCC regulates interstate services (10, 8). In order to keep local residential rates low, regulators allowed business and long-distance access rates to increase (9, 39). Today, rate-of-return regulation and price-cap regulation are commonly used in seeking to protect telephone customers from excessively high prices resulting from the carrier's exercise of market power (4, 58). In 1996, Congress passes the Telecom Act which seeks to open local exchange to competition through facilities-based entry (9, 9). 3. Horwitz, Robert Britt. The Irony of Regulatory Reform. Oxford University Press: Oxford, New York, 1989 Long distance companies also purchase a different form of carrier access, special access, from local telephone companies. Special access lines are leased by the month at rates corresponding to their capacity and distance. Actual usage is not metered. Special access, which is supplied by local telephone companies, competes with third party firms. These third party firms, called Competitive Access Providers or CAPs, build small networks in downtown business area that connect users to long distance companies without the use of local telephone networks. This is an example of a volume discount rate (10, 7). 4. Johnson, Leland L. Common Carrier Video Delivery by Telephone Companies. Rand Publishers: 1992 6. Olves III, Dick W. The Making of Telecommunications Policy. Lynne Rienner Publishers: Boulder, London, 1999. Technology is a key aspect in the growth of telecommunications. If one had to point to the single most important reason for the new competition in local telephone markets. It is the advance of technology. Digitalization has reduced barriers between voice telephone, data, and media services (9, 29). Microprocessors are the principal component of digital switches. So as their performance increases and their price falls, switching costs fall and scale and scope economies increase (9, 13). Scope economies mean that a few companies produce many services. The adoption of digital technology in all aspects of the network has improved performance and lowered costs. Digital transmission, whether over copper of fiber cables or over the airwaves, is cleaner and more secure due to more durable cables(9, 16). Technological advances such as fiber optics and wireless transmission have paved the way for competition in the local exchange. But, new technology alone could not bring competition to the local exchange (9, 10). It takes innovations in communications technology and new service offerings pressure both suppliers and industry regulators to change (9, 2). 2. Economic Commision for Europe, Geneva. The Telecommunication Industry: Growth and Structural Change. United Nations: New York, 1987
Some common words found in the essay are:
Bundled Rates, MCI's Sprint's, Company AT&T, IXC's Local, Carrier's LEC's, United Technology, Carrier's IXC's, IXC's LEC's, Telecommunications Industry, Telecom Act, local telephone, local exchange, telephone companies, price-cap regulation, scope economies, telecommunications industry, local telephone companies, operating revenues, telecommunication industry, competition local, rate-of-return regulation, third party firms, competition local exchange, american telephone telegraph, form price-cap regulation,
Approximate Word count = 2471
Approximate Pages = 10 (250 words per page double spaced)
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