Antitrust vs. Sector Specific Regulation in Telecom : A Close Look at Interconnection

In a companion note (Antitrust vs. Sector-specific Regulation in Telecom: What Works Best?), we argued that while the full liberalization of telecommunications markets provides scope for relying to a large extent on general antitrust rules and institutions as instruments of economic regulation, some sector-specific rules and specialized implementing institutions are still likely to be needed - at least for some time after liberalization - in a number of areas, including interconnection. In the present note, we look in more details at the regulation of interconnection drawing from the experience of New Zealand which fully liberalized its telecommunications markets in the late 1980's and relied primarily on antitrust instruments to regulate interconnection until 2001 when it introduced a new regime with heavier emphasis on sector-specific regulation