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HomePolicy Articles Article Summary

The Schumpeterian Wave in Telecommunications: Public Policy Implications

Choices by Yves Rabeau

Yves Rabeau argues that the emergence of digital information and the Internet represents a major innovation which has revolutionized the telecommunications industry. It is an innovation that has given rise to a broad movement of unlimited optimism and a number of excesses, one of which was overinvestment in the telecommunications sector. In this context, Rabeau attempts to establish whether or not better regulation of the telecommunications sector, in the areas of both the technologies and the competitive environment, would around limited the scope of the excesses that took place.

Rabeau notes that the difficulties to occur in the telecommunications sector are a product of the extravagant optimism of the players involved, and also the poor choice of business models followed. With companies going bankrupt at the end of the boom, there was a considerable loss of financial wealth, coupled with large layoffs, and the abandonment of key investment projects. Rabeau argues this waste of resources in the telecommunications industry could have been prevented if regulatory agencies had promoted the principle of network capacity sharing; this practice, in his view, would have prevented the considerable duplication that took place.

Rabeau suggests a number of alternative directions that telecommunications companies might consider, in order to better prepare for the future, including: becoming highly efficient carriers; occupying specialized niches within the business services market; and, offering packages to customers in partnerships with other firms. In this context, Rabeau suggests he is unsure that Canada’s long-distance market is substantial enough to sustain several cost-effective competitors over the medium term. He concludes that true competition in the telecommunications market will be found in the technological realm, and particularly the areas of wireless communications and cable distribution.

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Policy Publication Details

Author(s): Yves Rabeau;
Publisher: Institute for Research on Public Policy [ Visit Website ]
Year Published: 2004; Publisher Type: Research Institute
Publicly Available: Yes Research Focus: National;
Registration Required: No Language: English
Payment Required: No Publication Format: Adobe PDF

Subjects / Categories:

Policy Articles / Media & Communications / Telecommunications
Policy Articles / Media & Communications / Telecommunications / 2004
Policy Articles / Media & Communications

Keywords / Tags:

telecommunications sector; long-distance markets; wireless and cable technology; telecom business models; market competition;