The fact is that most costs are not known at all precisely by operators or regulators. There are two ways in which this view of the nature of the market is relevant to telecommunications policy: (i) The role of costs in regulatory profit controls, especially as regards the choice between rate of return limits and price caps. (ii) In market liberalisation, where new entrants probably have lower costs than those already in the market and use market prices as signals.

Inspec keywords: telecommunication networks; profitability; pricing; economics; legislation

Other keywords: return limits; world telecommunications economics; regulatory profit control; telecommunications policy; telecommunications regulation; market price; market liberalisation

Subjects: Telecommunication applications