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    Deregulation in Telecommunications = Competition?

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    Research several of the recent mega-media mergers such as AOL-Time Warner or ABC-Disney. What were the arguments for and against such mergers? In your opinion, have the critics of these mergers been proven correct? How do they affect our society?

    Has the deregulation of the telecommunications industry led to more competition?

    Describe the effect on local, long distance, and wireless telecom. Include discussion of the RBOCs and their development after deregulation.

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    Has the deregulation of the telecommunications industry led to more competition?

    Beginning in the early 1980s the United States entered a period of deregulation. The trend began in the Telecommunications Industry but spread to a wide range of industries including Transportation and Financial Services.

    Deregulation, in the early 1980s, was touted as an effective way to create greater competition and efficiency within an industry, and thus lower prices to the consumer while increasing quality of service. Government control within the business sector would only lead to inefficiency. Communist regimes throughout the world from the USSR to Cuba were examples of how too much government involvement and bureaucracy stifles business development.

    The movement towards deregulation began in the Telecommunications Industry as AT&T was viewed as a large monopoly that was stifling competition. The Airline Industry was the second industry to be deregulated. In their book The Evolution of the Airline Industry authors Steven A. Morrison and Clifford Winston point out that excessive passenger fares was at the heart of the Airline Deregulation Act in 1978.

    Deregulation would lead to greater competition and efficiency within an industry and thus, lower prices to the consumer while increasing quality of service.

    In its July issue, Consumer Reports offers a harsh review of government deregulation in the airline, telephone, banking, cable TV, and electricity industries. CR associate editor Jeff Blyskal claims, "Our research concluded that while consumers have made some gains under deregulation, on balance they've lost ground." The article acknowledges that inflation-adjusted airfares fell 37 percent in the 20+ years since the industry's 1978 deregulation. However, it also states that airfares fell just as much and just as fast in the 20 years preceding the deregulation of the industry. Furthermore, the Airline Industry was dominated in 1978 by four major carriers (United, American, Delta, and Trans World). Today, although there are many airlines, only seven airlines dominate the market with market share above 6.5% (Delta, United, American, Southwest, US Air, Northwest, and Continental). So has deregulation led to a healthier industry? In the month of August, American Airlines announced considerable lay-offs, US Air filed for bankruptcy, and United Airlines made known that they too may soon be forced into bankruptcy. Not signs of a healthy industry. Is the Airline Industry the only one of the ...