BUSI 5304 Global Economic Environ Deregulation Policy and Competition in the US Economy Summary.docx

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1 Deregulation Policy and Competition in the US Economy: A Case Study of the US Telecom Industry Angela Smith-Johnson Department of Business Administration, Huston-Tillotson University BUSI 5304: Global Economic Environment Section 50 Dr. Onochi Deili December 11, 2020 Deregulation Policy and Competition in the US Economy: A Case Study of the US Telecom Industry
2 In the US telecommunications industry, a major restructuring has taken place in the last decade, with industry boundaries blurring and increased pressure on regulatory commissions, leading to the intensification of competition in what was once the Bell monopoly market. (Majumdar 1992) The Telecommunications Act of 1996 in the United States removed regulatory barriers to entry, opening the market to new competitors. This coincided with decreased regulations in countries around the world; improving telecommunication technology which has contributed to the globalization of markets. Deregulation of the telecommunications industry has prompted numerous new firms to enter the market, which thusly, has prompted expanded rivalry. Link and Internet organizations started offering telephone utility while customary fixed-line suppliers started offering Internet and TV administrations. Deregulation has also changed local and long-distance monopolies by transforming these firms into highly competitive suppliers of communications offerings. Deregulation enhances the competitive environment of firms, spurring them to become internally efficient and better their overall performance, because the environment of a firm establishes the context within which operations are carried out and performance outcomes attained, performance changes after deregulation are brought about not because of a sudden change in the abilities of incumbent management, but because of the changing constraints and opportunities faced in a more competitive environment. (Majumdar) History of Telecommunication Industry Generally, regulatory agencies have practiced managerial powers over infrastructure industries as a component of the public authority exertion to develop a public field for business and to settle the fundamental administrations whereupon trade depends. The Telecommunications industry (along with other industries deemed as “infrastructure industries”) was brought under regulation during the 1930’s. The goal of regulating these
3 infrastructure industries was to safeguard commerce and secure basic social equity in the public interest. The industries that have undergone deregulation – airlines, trucking, railroads, banking, oil, and natural gas, all have a commonality. They provide the basic services upon which all economic activity rests. They are vital to the dissemination of capital and the progression of business. Telecommunication constitutes on of the four essential modes or channels that permit trade and discourse among members of a society, the other three being transportation, energy utilities, and money. These industries provide the services upon which all economic activity depends. (Horowitz 1991) Congress established regulatory oversight of telecommunication

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