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Building the Regulatory Foundations for Growth in Network Economies
W.H. Melody 

WDR Discussion Paper #0201

The foundation for information societies and network economies will be their new information infrastructures, the transformed and upgraded telecom networks. The point of entry to participation is through local communication networks, which determine the boundaries of opportunity for individuals, organizations and countries. Infrastructure industries always have been treated differently than industry in general for two reasons – market failure and public interest. High transactions costs, economies of scale, positive feedback and network externalities all contribute to market failure. Yet experience with telecom “natural monopolies” has demonstrated a failure of monopoly and prompted the reform movement of recent times, the implementation of which is expected to be driven by national telecom regulators.

In its early stages, the pace of information infrastructure rollout has been unacceptably slow. The growth path of any economic sector is significantly affected by the opportunities provided by available technologies, market characteristics and policies/regulations. These factors can be mutually supportive in stimulating growth and creating benefits, or they can conflict, creating major blockages. Regulation has led developments in the past, but lags on information infrastructure issues primarily because telecom industry specific regulators are not equipped to address the challenges of, fostering a rapid and efficient rollout of information infrastructures, and building the regulatory platforms needed to promote electronic trade, consumer protection, and other requirements for widespread take-up of next generation Internet services.

The World Dialogue on Regulation for Network Economies (WDR) project is taking up the challenge of next generation regulation. WDR hopes to provide a stimulus for countries and regions to address these important issues sooner rather then later, and a knowledge resource that will support informed policy and regulatory decisions in all countries. The first WDR Dialogue Theme is The Next Step in Telecom Reform: ICT Convergence Regulation or MultiSector Utility Regulation? Research and dialogue on these two models and the regulatory options they generate will help prepare the ground for next generation regulation.

Keywords: Next generation regulation; regulatory foundations; network economies; information infrastructures; communication networks; industry specific regulation; next generation Internet services; ICT convergence regulation; multisector utility regulation; information infrastructure development; market failure; network externalities; positive feedback; promotional regulation; constraining regulation; reform and regulation; dynamics of technologies, markets and regulation.

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Document Date:
Jan 2002
Author:
Melody, William.
Discussion Paper No.:
wdr0201
Pages and file size:
15 pages, 108 kb
Title: 
Building the Regulatory Foundations for Growth in Network Economies
Collection Title:
World Dialogue on Regulation for Network Economies