Purpose – The paper examines the main regulatory frameworks of the telecommunications industry through the concept of market failure and analyses how and why the policy often leads to undesirable outcomes that might be considered as regulatory failure. Methodology/approach/design – The research uses the EU regulatory framework for electronic communications as a base for the analysis of the main policy objectives through the prism of the market failure theory with an eye to the interests of the main market players in the telecommunications markets. Findings – About any aspect of regulation allows to find ways to create opportunities for some groups of the industry and stifle activity of others. Despite the theory of market failure provides reasonable justifications for regulation of telecommunications markets, it is possible to argue that many of these problems are mainly the consequence of the policy and could be better solved by market mechanisms. Originality/value – The results of the research allow to look at the problems of telecommunications development and issues of the high level of concentration of the telecommunications markets as regulatory formed problems rather than consequences of the inherited industry’s characteristics.
Purpose – The liberalization of European telecommunications has been expressed in highly concentrated markets with several major players at the pan-European level. Instead of fostering competitive marketplaces, the reform has created an oligopolistic landscape with powerful private corporations. This induces reasonable questions about the real objectives and the chosen ways of the reform.
Methodology/approach/design – The deregulatory movement in the telecommunications sector is analyzed through contrasting perspectives of the public interest approach and public choice theory.
Findings – The chance to change the landscape of the industry has been missed, and the current trend towards the global oligopolistic marketplace yields an unprecedented amount of economic power to narrow groups at the global scale. The liberalization movement introduced market mechanisms in the industry, but the real free and open market has never been formed, and it is possible to assert that it has never been among the real objectives and intentions of the policymakers.
Originality/value – The recent surge of “liberalization” in the telecommunications industry speaks rather in favor of the hypothesis of vested private interests in the policy and that they have always been greatly covered by the sauce of public interest justifications. The case of telecommunications shows that ideas and understanding of economic phenomena played an important role in adoption of regulatory regimes, and it is apparent that people on the top of the social pyramid have opportunities to pick up and foster those ideas that better fit their private needs.