Divestiture and regulatory policies: Implications for research, development and innovation in the US telecommunications industry

Robert G. Harris

Telecommunications Policy, 1990, vol. 14, issue 2, 105-124

Abstract: This article reviews recent changes in the structure of the US telecommunications industry and in public policies following the divestiture of AT & T, and examines their implications for R&D and innovation. A brief review of changes in the organization of R&D in the former Bell system is followed by a consideration of the effects of market structures on R&D incentives and organization. Finally the article examines the effects of the line-of-business restrictions imposed on the regional holding companies by the Modification of Final Judgment, the FCC's requirement for open network architecture, and rate-of-return regulation by state utility commissions. The central conclusion of the article is that US telecommunications policies may undermine incentives for R&D by the Bell operating companies while providing considerable incentives for them to turn to foreign manufacturers for new technology.

Date: 1990
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