PRICE CAP REGULATION FOR TELECOMMUNICATIONS - HOW HAS IT PERFORMED IN PRACTICE

Since it was first introduced in the UK in 1984, an increasing number of countries have introduced price cap regulation for telecommunications. But to what extent have the promised benefits of the scheme actually materialized when it has been applied? This paper concludes that price cap regulation has been effective in containing price increases for non-competitive services and in controlling the nature, extent and speed of price rebalancing, However, it finds that attempts to fine tune the price cap scheme in the UK, the USA and Australia have resulted in a complicated, more intrusive, less transparent system than was originally intended.