Strategic Interaction under Asymmetric Regulation - Adoption, Usage, and Global Impact of Broadband Technologies - page 45

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dations for growth in network economies . World
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discussion paper #0201.

Price Cap: A maximum retail price set for the
provision of a good or service. Typically set by
an industry-specific regulator.
Two-Part Tariff: A tariff set such that there
is a fixed component, usually for access to an
infrastructure service, and a variable component
proportional to the amount of usage of the infra-
structure services.
Flat-Rate Tariff: A special case of a two-
part tariff whereby the usage component is
set to zero.:
Interconnection: The agreement between
two network operators enabling customers of one
network to enter into exchanges with customers
of the other network.
Local Loop Unbundling: A regulatory re-
quirement whereby the owner of the bottleneck
local loop of telecommunications network is
required to lease access to competitors in order to
enable them to compete in the provision of services
to end consumers. May also include arrangements
whereby competitors are allowed to attach some
of their own components to the regulated firm's
network in order to provide differentiated services.
Functional Separation: A regulatory obliga-
tion imposed upon a dominant telecommunica-
tions firm whereby it is required to separate its
network, wholesale and retail operations into
functionally separate firms which are unable to
interact with each other in any manner that is
different from its competitors and customers (i.e.
the firm is unable to use shared ownership as a
means of coordinating activities).

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Wilson, A. (1994). Wire and wireless: a history of
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KEY TERMS AND DEFINITIONS

Competition Law: A form of over-arching
industry governance whereby the legitimate
means by which firms may interact in competi-
tive processes are specified. Breaches are usu-
ally pursued in court-based anti-trust actions:
where the plaintiff is required to demonstrate
that the defendant with market power has acted
unilaterally to exert its market power in a manner
other than that exercised by a competitive firm in
a competitive market.
Industry-Specific Regulation: A form of
over-arching industry governance whereby the
market power of a dominant firm is constrained
by a specific set of prescriptive prohibitions or
conditions determined by an industry regulator.
Provisions and prohibitions are typically im-
posed following an extensive politically-based
lobbying process: so may or may not be consistent
with longer-term objectives of increased welfare
or competitive market outcomes.
Universal Service: The requirement that all
consumers are charged the same price for a good or
service, regardless of any differences in the costs
of providing the good or service to the different
customer groups.

ENDNOTES

*

It cannot be discounted that the Govern-
ment was so poorly informed that it had no
conception of these ramifications. However,
accepting this premise requires the ad-
ditional assumption that the government's
policy advisers were largely ignorant of the
economic fundamentals of both regulation