Telecommunications Law

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Telecom Law and Regulation

Professor: David Olson

September 14, 2012

Week 2 Case Study

What is the natural monopoly ?
Natural Monopoly is a monopoly that exists because the cost of producing the product (i.e., a good or a service) is lower due to economies of scale if there is just a single producer than if there are several competing producers. (http://www.linfo.org/natural_monopoly.html) Today, telecommunications technology affects lives to a greater degree than ever before. Communication has evolved over many years from the earliest attempts at verbal communication to the use of sophisticated technology to enhance the ability to communicate effectively with others. A natural monopoly is said to exist in an market where the costs of production are such that it is less expensive for demand to be bet by one firm than it would be for that same demand to be met by more than one firm (Benjamin et al., 2005). Every time a telephone call is made, a television is watched, or a personal computer is used, benefits of telecommunication technologies are being received. The American television industry is presently undergoing rapid change. Where once there was a limit on viewing options imposed by scarcity of electro-magnetic spectrum, confining most views to handful of channels that were dominated by three COM distribution systems, cable television is emerging now as “ the television of abundance,” (Sloan Commission, New York 1981). A natural monopoly is said to exist in any market where the costs of production are such that it is less expensive for demand to be met by one firm than it would be for that same demand to be met by more than one firm (Benjamin et al., 2005). Examples of natural monopolies are railway systems and telephones systems. All the phones should be connected...
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