Significant questions about the applicability of price regulation arise with the advent of intermodal competition, that is, competition between, say, traditional telephone networks and cable television providers whereby each provider offers voice telephony, broadband data, and video content services. This particular offering is popularly described as a Triple Play. The addition of mobile services offers the possibility of a fourth play in the mixture. Each provider uses a different network infrastructure. Generally, cable television providers seem to be having an easier time upgrading their networks so as to offer broadband data and voice telephony than traditional telephone providers are having in adding video content services to their offerings. Still, multiple play offerings are becoming more and more widespread throughout the world.
The rationales described in section 5.1 whereby price regulation has been applied to a telecommunications provider are weakened considerably when that provider faces competition from a competing infrastructure. Regulation is, after all, intended as a substitute for competition and where competition itself exists or is emerging, the justification for continuing to regulate retail prices becomes less relevant. Some regulators are responding to the emergence of intermodal competition by exempting multiple play offerings from price cap regulation. The traditional voice telephony service is still available to be purchased at a regulated price, but the regulator has opted to allow the market to determine the price for the bundled triple play offering. However, this is an emerging area and the policy questions are evolving rapidly.
RELATED INFORMATION
Thomas M. Lenard and Randolph J. May (eds.). Net Neutrality or Net Neutering: Should Broadband Internet Services Be Regulated? (New York: Springer: 2006).