Competition in Telecommunications*

Abstract

Laffont and Tirole (LT hereinafter) have written a much-needed book that brings together the theory and practice of telecommunications regulation, especially interconnection pricing, in an era of increasing competition. It is almost a clich6 to observe that the work of these authors, who have produced so much prominent research in this area, is insightful, comprehensive, and elegant; yet such descriptions are needed to aptly characterize this book. The main design feature of the book is a separation of the text from technical boxes that present formal models. This is a laudable plan and it succeeds in making much of the book accessible to those who are familiar with the issues but are not professional economists. It is still fairly technical reading and in places cannot be well understood without venturing into the technical boxes. Certainly only professional economists with some prior understanding of the models can fully digest the material. But for professionals and nonprofessionals alike the effort of reading is rewarded as the text lays bare basic economic lessons that are often misunderstood or lost in the contentiousness and complex details of regulatory practice. Even to those who are very familiar with the material, the book is worth reading simply for the enjoyment of witnessing the depth and breadth of LT's mastery of the material, and their customary eloquence in putting it all together. This book should be read by every consultant, industry participant, and academician with an interest in telecommunications regulation; by any economist who wants to become acquainted with the revolution occurring in the industry; and by the technical staffs of national regulatory agencies. It may be too technical for generalists and state-level regulatory commissions, but it should at least be skimmed by everyone involved in regulating the industry.