Antitrust Alert: Justice Department Releases Report on Telecom Competition

On November 17, 2008, the U.S. Department of Justice Antitrust Division issued a report on developments in competition in telecommunications industries: "Voice, Video and Broadband: The Changing Competitive Landscape and Its Impact on Consumers."  This Report reflects the DOJ’s understanding of the competitive state-of-play in this sector and highlights some of its enforcement priorities.

The Report summarizes presentations made at the DOJ’s November 2007 telecom symposium and addresses ongoing competitive issues that may affect telecommunications consumers. It includes discussion of the development of new facilities-based competition, wireless alternatives to wireline networks, the significance of bundled products, and obstacles to competitive entry.

Assessing the overall telecommunications sector, DOJ sees positive trends in competition, based on continued investment in facilities, convergence and increasing substitution among technologies, and the broad availability of services in most areas. In particular, the Report cites new competition by video providers against cable television incumbents, by cable operators to provide telephone service, and by new terrestrial and wireless broadband providers. Some of these have made possible bundled service offerings of telephony, broadband, video, and wireless. The Report also discusses possible barriers to entry in video, telephony, and broadband, highlighting barriers that result from regulatory policy or conduct of incumbent providers. The DOJ repeatedly has advocated reduction in regulatory barriers to new competition, such as in local video franchising. The Report does not discuss in any detail current legislative issues such as net neutrality or the specific telecom enforcement actions the DOJ has taken in recent years. The Report does note that the DOJ would in the future like to study the competitive implications of bundled pricing, substitution patterns, and quality-adjusted pricing trends.

This is the most recent of a number of reports that the DOJ Antitrust Division has released on industry and antitrust enforcement topics. Preceding this were reports on monopolization policy (September 2008) and, with the Federal Trade Commission, real estate (April 2007), intellectual property (April 2007), and health care (July 2004).

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