This paper analyzes the development of a “tight oligopoly on steroids” in the communications sector. It uses Business Data Service as an example because it represents a new choke point in the sector. The other services in the “tight oligopoly” include wireline and wireless, cable and set top boxes, and broadband. Using antitrust concepts in the Merger Guidelines the paper argues that high levels of concentration are reinforced by geographic separations, technological specialization, and product segmentation to magnify market power. The paper also uses Alfred Kahn’s discussion of the justification for regulation to explain the long and successful dual jurisdiction (antitrust and regulation) used to control the pervasive market power in the sector. The paper concludes by showing how the concepts and recommendations can be applied to the digital platforms (search and social media), in which an even worse “tight oligopoly on steroids” exists.

By Mark Cooper & Amina Abdu1

 

This paper uses Business Data Services (“BDS”)2 as an example of a broad problem that affects antitrust and regulatory oversight of the communications sector and its primary consumer products – wireless and wireline telephone service, cable connectivity devices (set top boxes) and services,3 and broadband.4 The unique challenge is a “Tight Oligopoly on Steroids” that came to dominate the sector because of the inherent economic conditions in communications markets and a

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