retail access. Access regulation affects the demand for network capacity in two ways. First, com- pelled access can increase (or possibly decrease) the total demand for network services, thus affecting the efficient design of the network. Second, compelled access can alter the traffic patterns on the network, creating different usage levels in specific locations and different points of congestion. Wholesale access is likely to consume network capacity in ways that differ from retail access. Unbundled access takes up network capacity at the fundamental level of the nodes and links themselves. By tying up some of the capacity (even if not foreclosing the network Networks in Telecommunications owner from using the link altogether), competitors radically change the optimiza- tion decision of the network owner. Platform access can fundamentally change the demand for network services by altering the types of usage, SO that different types of transmissions (voice, data, video) change demand for network capacity. Interconnection also changes the demand patterns for network capacity because originating, terminating, and transiting communication on the network changes traffic patterns. This chapter examines the demand for network capacity and the prices that allocate network capacity. We consider the effects of uncertainty on pricing and the allocation of services. We further examine the pricing of network capacity under asymmetric information. Next, we consider network capacity pricing when usage creates congestion that reduces the quality of service. We consider pricing when there are blocked calls in a telephone network and pricing when there is information loss in a data network. Finally, we examine the demand for network capacity when consumers can buy services that are substitutes or complements for network capacity. A. Network Capacity and Pricing 1. The Basics of Pricing with Scarce Capacity As a first approximation to the problem of pricing capacity, we assume that the demand for capacity is not subject to uncerta