Conference Agenda

This paper addresses a central paradox in telecommunications policy: why identical wholesale access mandates generate vibrant retail competition in some jurisdictions while resulting in market stagnation in others. We construct a game-theoretic model of asymmetric duopoly between regional network operators to demonstrate that entry outcomes are determined by market fundamentals, cost structures, and firm capabilities. We derive a critical wholesale rate threshold below which retail entry becomes a dominant strategy and above which competitors prefer to split geographic markets. By contrasting this threshold with the incumbent's long-run incremental cost floor, we formalize two distinct regulatory regimes: the Goldilocks Zone, where regulators can simultaneously guarantee cost recovery, induce sustainable retail competition, and preserve investment incentives; and the Regulatory Trilemma, where no single wholesale rate satisfies all three objectives without explicit policy interventions. Our empirical calibration to the Canadian fibre-to-the-premises (FTTP) market demonstrates how mandated wholesale rates under the Canadian Radio-television and Telecommunications Commission (CRTC) interact with entrant cost structures and service capabilities. We show that sustainable competition relies on operators leveraging multi-product bundling capabilities and operational scale efficiencies to achieve commercial viability. For regulators across jurisdictions, this diagnostic framework clarifies the structural trade-offs inherent in wholesale access pricing and enables balanced policy design.