Term
| How does the network effect work? |
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Definition
| for some products or services, the more people who use or buy a particular brand, the more valuable that brand becomes. For example, Facebook is a more attractive product than Google+ because more people use Facebook. As a result, Facebook has many more users and has been a lot more successful. Telecommunications networks work similarly; the more users a particular network has, the more valuable it becomes, precisely because more people are using it. |
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Term
| How do economies of scale work? |
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Definition
| In some industries, there are very high initial fixed costs associated with starting a company in the industry from the ground up. However, once the fixed costs are incurred, the marginal cost of providing service to customers is very low. This means that spending more on fixed costs at the beginning to be able to serve more customers often leads to a cheaper cost of providing service to each customer, because the marginal costs are so low. |
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Term
| How do economies of density work? |
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Definition
| Economies of density is a problem relating to how companies chose where to give service. If a telecom company had the choice to lay one cable to an apartment complex servicing 1,000 customers, that seems like a good decision. However, if 9 other companies decide to follow in the first company's footsteps and each lay a cable to the apartment complex, then each company would service only around 100 customers each, making it very difficult to gain back the sunk costs of laying the cable. |
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Term
| The Telecommunications Act of 1996 did what? |
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Definition
| It abolished all exclusive franchises, ordered all telecom carriers to interconnect with all requesting carriers, and declared all local exchange, long distance, and access markets open for competition. |
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Term
| Why was the Communications Act of 1934 revisited in the 1980’s? |
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Definition
| The invention of cellular technology fell within the gray area of title II of the Communications Act, regarding the carriage of signals point-to-point, and title III, governing the use of airwave. As a result, an addendum was made to title III. |
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Term
| How does the FCC view regional telco markets for fixed broadened internet access? |
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Definition
| Duopolies - dominated by legacy telcos and cable incumbents |
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Term
| What does PSTN stand for? |
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Definition
| Public Switched Telephone Network |
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