gone online, with worldwide electronic transmission of information, technology, services, entertainment, and money. Telecommunications companies have played a starring role in a significant number of megamergers that have transformed the business environment and also served as a driving force behind the spectacular rise and equally spectacular fall of the NASDAQ index. Perhaps most dramatically, the failure of WorldCom produced the largest bankruptcy in U.S. history. In addition, scientific advances have rendered the technological environ- ment increasingly dynamic, with different types of communications now available through an ever-increasing array of transmission technologies. These developments have made different communications media increasingly interchangeable and have turned different technological platforms that had previously constituted universes unto themselves into competitors. Not only has the emergence of platform compe- tition provided consumers and firms with a wider variety of ways to access network services; it has also begun to put pressure on the traditional regulatory distinction among voice, video, and data communications, under which each type of service was governed by a separate regulatory regime (Yoo 2002). It is also forcing policy makers to abandon their traditional approach of framing regulation in largely static terms and to begin focusing on issues of dynamic efficiency, with the accompa- nying emphasis on providing incentives for investing in the deployment of new technologies. These developments have heightened the importance of understanding how networks function and how regulation affects their behavior. Not only does gov- ernment policy play a key role in shaping returns and investment incentives; a growing number of commentators have suggested that regulation has also played a decisive role in precipitating much of the turmoil that has wracked the indus- try of late, having shaped both the recent wave of mergers (Chen 1999) and the WorldCom bankruptcy (Wall Street Journal 200