The role of resale entry in promoting local exchange competition

This article examines the role of resale entry in achieving competition in local exchange telecommunications markets in the US under the Telecommunications Act of 1996. Contrary to the claims of many incumbent local exchange providers, we argue that: (1) resale entry produces direct competitive benefits; (2) resale entry will not reduce incumbent incentives to invest in the local network; and (3) resale entry will not reduce more beneficial facilities-based entry. We also examine avoided cost estimation issues in determining wholesale discounts.