It is said that the demand for individual services in the telecommunication service, such as mobile phones, facsimile, E-mail service, has the largest scale of network externality. In this paper the network externality is defined as "The value of the products or services increase as the people who use goods and services grow". As a result of a major impact on the dissemination of the product, the external network may result causing a monopoly. These kinds of markets which distorts the free and fair competition, is called a "monopoly bottleneck".
This paper is mainly analyzed by using the concepts of compatibility, network, and a lock-in effect. To consider the monopoly bottlenecks competition policy, this paper would do the analysis from both Structure Regulation and Behavior Regulation terms. By doing this, this paper would like to consider the process of the monopoly, and what is the role of policy and regulation against the monopoly.
In this paper, I would like to explain the factors of the network externality, how it works, and what kind of effects it has on the competitive market, and also to analyze the relation between the consumer demand and the price setting done by the service-providing company. Still, this paper would like to explain what kind of changes and effects it would be brought to the market, and to the consumer welfare too, if new firms entry into the same telecommunication market.