ly been (1) the wires needed to connect individual residences and businesses to the central office facility maintained by the local telephone company and (2) the switching equipment needed to route individual calls to their destinations. Over time, the fixed costs needed to provide both transmission and switch- ing have both dropped dramatically. The most dramatic development with respect to transmission has been the emergence of wireless alternatives to wireline trans- mission technologies. The first significant deployment of wireless transmission technologies was the use of microwave relay and satellite systems as substitutes for wireline long-distance services. This was followed by the widescale deployment of cellular telephony, personal communication services (PCS), and other wireless technologies that could serve as substitutes for conventional wireline local service. Although the fixed costs needed to deploy wireless networks are significant, they pale in comparison to the fixed costs needed to deploy wireline networks. As we discuss in greater detail in Chapter 8, improvements in computer processing tech- nology have also effected an equally dramatic drop in the fixed costs of switching. The advent of first electronic and then digital switching has caused the fixed cost of switching technologies to plummet. Switching functions that once required equip- ment that occupied an entire building can now be performed by a box roughly the size of a personal computer. The net result is a dramatic reduction in the fixed costs needed to establish a telecommunications network sufficient to undercut the natural monopoly-based justifications for regulation. In addition, the emergence of wireless transmission has brought local telephony within the ambit of the theory of contestable markets (Baumol et al. 1982), which takes issue with the prior scholarship arguing that high fixed costs necessarily represent a barrier to entry (see Bain 1956 for the classic argument and Woroch 2002a for an application to telephony). Contes