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Abstract: In 2011, Chile's Undersecretary of Telecommunications, Jorge Atton, was considering adopting a different policy toward regulating competition in Internet services than previously applied to voice telephony. Atton headed Chile's telecommunications regulatory agency, SUBTEL. For the past two decades, SUBTEL had encouraged the emergence of competition in telephone services in part by forcing the incumbent telephone company to give new entrants to the industry access to its customers. SUBTEL had circulated for public comment consultation document that raised the possibility of imposing open access requirements on the providers of broadband Internet services. This case discusses the debate over open access in Chile.
Learning Objective: This case is designed primarily to stimulate a discussion of the merits and demerits of open access and vertical unbundling in courses or executive programs on regulation or competition policy. It can also be used in introductory economics courses to illustrate the problem of natural monopoly, the concepts of scale and network economies, the definition of the relevant market for competitive purposes, and the problems of marginal cost pricing in industries with strong economies of scale.