Debate on Need for Deregulation

Debate on the need for deregulation

The arguments in favor of deregulation are numerous. Advocates argue that continued regulation can only support the development of static markets while deregulation is necessary for the development of dynamic markets. Market convergence and infrastructure competition are more likely to occur in dynamic markets. In many telecommunications markets, deregulation is currently under discussion. In this article, we will examine the impact of deregulation on the global economy and explore the arguments for and against deregulation.

Arguments for deregulation:

  1. While creating a sustainable competitive market environment, deregulation is a logical step to support the future development of the industry and it supports the process of liberalization from a monopoly market to a competitive market.
  2. The rationale for deregulation is that less regulation will lead to greater competitive intensity, increased related investment, more innovation, and better customer benefits.
  3. Continued regulation can only favor the development of static markets while deregulation is necessary for the development of dynamic markets. Market convergence and infrastructure competition are more likely to occur in dynamic markets. Deregulation should positively influence infrastructure investment decisions of incumbents and unlock dynamic market effects.
  4. Increased competition increases consumer welfare and operators would be willing to invest if there is an adequate return on investment. Market rip-offs can drive development actors into everyone’s core business, increasing the pressure for innovation and related investments. Expect the deregulation of the telecommunications sector to stimulate investment in new infrastructure.
  5. Deregulation of the telecommunications sector is expected to have a positive impact on employment, tax revenue, consumption and GDP, as deregulation stimulates investment in infrastructure and has a positive impact on overall economic growth and welfare consumers. In many countries, deregulation of the telecommunications sector is seen as a way to stimulate investment in new infrastructure.
  6. It is argued that analysis of regulatory policy changes in the United States over the past few years has indicated that deregulation has in fact led to major investment announcements from major fixed operators in the country and suggests a positive impact of deregulation on the number of investments in the telecommunications sector and on the economy as a whole.

Arguments against deregulation:

  1. Markets are often regulated to prevent abuse by de facto or legal monopolies and to protect the rights of consumers and new entrants.
  2. Liberalized telecommunications markets have been regulated to achieve public interest objectives (such as widespread availability of services) and to avoid abuse of market power by incumbents through price discrimination, subsidies crossings and remonopolization.
  3. Among owners of marked regulated networks with a considerable market, electricity is obliged to provide access to other market players (non-discriminatory and based on regulated tariffs).
  4. Since the passage of the law, the degree of monopoly power and market concentration in the telecommunications sector has increased, which could have potentially serious consequences for the deployment of the technology in disadvantaged communities. There is a common understanding in the United States that regulation has led to lower investment.
  5. Union des consommateurs concludes that the Telecommunications Act of 1996 did not promote competition between the ILECs, because the bill had hoped that instead of the ILECs encroaching on each other, they proceeded to mergers, and five years later, the four largest local telephone companies owning about 85% of all lines in the country. It continued historic industry consolidation by reducing the number of major media companies from about 50 in 1983 to 10 in 1996 and just 6 in 2005.
  6. Going forward, most players will seek to exploit and control markets and technology to their own advantage. It will be difficult to apply a set of programs that shape the emerging infrastructure to achieve the goals of social efficiency, equity and universal service.

Conclusion:

Although it is far from clear whether infrastructure investments are better achieved through deregulation and unfettered competition or through a new form of regulatory intervention, several studies support the conclusions that deregulation of the telecommunications sector triggers investment and overall growth of the economy. .

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Creation date Sunday, June 24, 2012 Hits 10820