Strategic Interaction under Asymmetric Regulation - Adoption, Usage, and Global Impact of Broadband Technologies - page 42

the regulatory imposition of tariff structures that
prevented market-based adjustments. The hope
is that, in more competitive broadband markets,
the temptations to impose asymmetric retail tariff
obligations are less pressing.
In sum, therefore, the New Zealand case study
serves to further reinforce that asymmetric obli-
gations on an incumbent, be they embodied in
legislation, regulation or contract, do not create
a 'level playing field' on which competition can
play out. Whilst they may exclude the incumbent
from adopting some strategic options that might
otherwise be available, they open up the pos-
sibility of other strategic options to its entrant-
competitors that would not otherwise exist. The
ensuing interaction will not necessarily conform
to textbook patterns of behaviour or outcomes, and
will be contingent upon the emergence of other
exogenous factors (e.g. technologies) that affect
the balance of powers in the industry. Dynamic
competition is an inherently unbalanced game of
strategic interaction by parties each striving to
gain the upper hand. If asymmetric obligations
provide the opportunity, either party will utilise
the asymmetry to gain competitive advantage, as
has been evidenced in the case of New Zealand's
'Kiwi Share'. If legislation, regulation and con-
tract design fail to take account of the strategic
possibilities invoked, the outcomes may be very
different from those expected.

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Covec (2004). Benchmarking Telecom's UPC
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govt.nz//IndustryRegu lation/Telecommunica-
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Dixit, A., & Nalebuff, B. (1991). Thinking strate-
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