Deregulation of European Telecommunications: The Role of Private Interests

Abstract

The large-scale reformation of various economic industries, which took place in developed countries at the end of the last century, is very oft en perceived as “liberalization” or “deregulation”. Meanwhile, there are robust reasons to argue that this terminology does not fit correctly the nature of the real transformation. Moreover, the newly formed system is often described in modern literature in such terms as “managed competition” or “regulatory capitalism”, and this system highly relies on various forms of government interventions in the market process, which makes the environment incompatible with the proclaimed values of neoliberalism. The analysis of the actual processes from the point of view of private interest theories of regulation allows one to conclude that the real objectives of the new regulatory environment were rather the suppression of market mechanisms and the curbing of the creative destruction process, than the development of market institutions as was proclaimed in the official documents. Moreover, it is important to take into account that the scientifi c discussion also off ered an alternative to the chosen methods. It could be based on the views of the Austrian school of economics, which understands competition in a diff erent manner than the neoclassical mainstream does. However, this alternative was widely ignored by the reformers. This study focuses on the European telecommunications sector. The history of its reformation allows one to see in details how, under the guise of market liberalization, the reforms created a new regulatory regime that was aimed at restriction of market forces. Th e research uses the approaches of the Austrian school, as well as those of the Virginia school of political economy which formed the main postulates of public choice theory, according to which government interventions are mainly explained by private interests of powerful actors.