Worldwide Wait? How the Telecom Act's Unbundling Requirements Slow the Development of the Network Infrastructure.

The Telecommunications Act of 1996 instructs some local exchange telephone companies to provide components of their networks on an 'unbundled' basis to other local exchange companies. The unbundling requirement means that the receiving companies can serve a market either by self-providing their own infrastructure or by leasing the unbundled network elements. The Act therefore confers on receiving companies an 'option' in the forms of the build-versus-buy decision. This paper describes how the existence of an option affects the development of a new and advanced infrastructure. The discussion also considers whether the impact is socially optimal. Copyright 1998 by Oxford University Press.