Networks in communications, transportation, and distribution are fundamental features of the modern economy. Network industries are a major source of economic growth and a key component of economic development. The expansion of telecommunications, the Internet, and mobile communications has accompanied innovations in information technology. Although electronic commerce was once viewed as a specific category of business transactions, practically all business activity has come to depend on digital communications networks.

Public policymakers are keenly aware of the critical role of telecommunications in the economy. A great shift in regulatory focus has occurred, from more traditional utility regulation to access mandates. Examining changes in public policy in telecommunications requires a more fundamental understanding of the structure and function of networks. Expansion of the economics and law literatures on networks has accompanied economic and technological developments. The purpose of this book is to evaluate the implications of this public policy shift and to achieve a better understanding of public policy toward networks.

To achieve these objectives, the book develops a comprehensive framework for the study of telecommunications networks. We draw upon important developments in the graph theory that is used to represent networks. We examine economic models of networks and apply these developments to study the legal aspects of network industries. The result is an outline of a theory of telecommunications networks that generates insights into important public policy debates, including mandatory access and network neutrality.

The book is organized as follows: The first part introduces the economics of networks.