Tariff-quality equilibrium and its implications for telecommunications regulation

This paper provides an empirical analysis of the effects of telecommunications liberalisation on the fixed line telecommunications operators' strategy formulation in Hong Kong. The analysis is based on an innovative experimental methodology to measure the level of quality of the major telecommunications operators in an international simple resale-based competitive market. A major finding is that intensified competition will lead to a tariff-quality equilibrium. Consequently, we discuss an appropriate regulatory regime for service quality.