How to Exploit Market Power : Horizontal Ownership Concentration and Network Access Pricing

This article reports an evaluation of the impact of horizontal ownership concentration on access pricing outcomes. Historical data of post-acquisition impacts on firms’ access outcomes have enabled analysis for the entire local exchange sector of the United States telecommunications industry. The sector’s horizontal ownership concentration process has caused key access-providing firms’ average access revenue ratios to be over 16 percent higher. Access revenue enhancements, through using market power, by entities belonging to larger groupings, have resulted in annual fiscal windfalls of between $5 and $6 billion, and these windfalls account for between 4.5 and 5 percent of provider firms’ total revenues. United States customers have incurred a between 6 and 7 percent overcharge on monthly bills, over several years, because network access charges have been higher, in part due to horizontal ownership concentration. Access and interconnection functionalities permit digital ecosystems competition. Access charges are regulated. The horizontal ownership concentration-enhancing deals were allowed after stringent institutional assessments. Market power exploitation has led to United States telecommunications customers’ exploitation. Consumer harm has been immense. Classic topics, such as access regulation and merger control, remain contemporary, demanding continuous attention, if digital technology is to be ubiquitous in the service of humanity