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Effects Of Competition In The Telecommunication Industry

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3.1. Competition in Telecommunications Services
Experience has demonstrated that individuals can benefit from open competition by ensuring low prices, new and better products and services and expending consumer’s choice greater than what occurs under monopoly conditions. In an open market, producers compete to win consumers, by lowering the prices and developing new services that will best meet the needs of customers. A competitive market rewards the producers that are innovative; introduce new product and new production processes. By doing so the wealth of the society will increase, but in the competitive market may happen the opposite, there may be businesses that fail to understand consumer needs and they will face with decline in the number …show more content…

Effects of Competition in the Telecommunication Market
The benefits of competition introduced in the telecommunication industry are visible in all segments of the telecommunication industry. For example, competition in United States and in many other countries in long distance and international telecommunication services has led to dramatic decline in consumers rates for these services, but on the other side has caused a dramatic increase in demand and substantial increase in investment.
International telecommunications services are particularly important to the development of a stable and powerful economy linked to the global marketplace. The 1997 WTO Agreement on Basic Telecommunications Services introduced a new era for telecommunications competition in many countries of the world. As part of the agreement, 72 countries all around the world have made commitments to open their telecommunications markets to foreign suppliers for basic telecommunications services. After the commitments, implemented by the countries, dramatic changes have occurred in their telecommunication market. In many countries, there are several new providers of international and domestic telecommunications services, and prices of these telecommunication providers are dramatically lower. As a result of this, the increased competition has led to lower international settlement rates in many countries which, in turn, it has led to lower calling prices for consumers. Lower calling prices means that people …show more content…

These stimulations can exist only when there is open entry into the telecommunication market, when the entry is limited or when only one or two entrants are allowed to compete against the incumbent carrier; the benefits of competition are limited as well. When cellular telephone service was first introduced there was only one license in the market. As a result prices were relatively high and demand was limited. After additional licenses were authorized in the market and prices dropped, new services were introduced and demand

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