The firm theory and the industrial organization model seem unfitting in explaining the media and telecommunication industries. For instance, in telecommunication industry, even the HHI shows low concentration among several companies, it does not mean the telecommunication market is highly competitive. Because of the limited and precious resource of spectrum, most governments release few mobile licenses to avoid the interference problem. The product differences between telecommunication operators are minimal because these operators access the same telecommunication infrastructure in the same country. Moreover, these operators often have some unspoken consensus with each other because they will try to provide similar products and price to avoid a price war. Consumers seem to have many choices with mobile services but, in reality, all of these different brands provide the same service.
Because of the fast development of communication technology, a telecommunication company must often update its governmental licenses in order to keep up with other companies. Companies claim to need these licenses from the government to ensure protection of the customer’s consumer right. Newcomers to the market find it difficult to acquire these licenses and thus struggle in this fast-moving industry. This unhealthy trend will reduce the competition in telecommunication industries and hurt the rights of consumers.
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