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STRATEGIC ALLIANCES & INTERCONNECTION:
CONTRIBUTIONS OF GAME THEORY TO TELECOMMUNICATIONS 

January 9  - 11, 1995

International Telecommunications Society & University of  Colorado 

			Symposium

_______________________________________________________________________________________________________________________________
Strategic alliances are playing an increasingly prominent role in 
emerging telecommunications, information processing and entertainment 
markets.  These alliances promise to drastically alter the technological, 
regulatory, and market landscapes throughout the world.  The 
transformation of the telecommunications marketplace is unique in that it 
represents the merging of traditionally regulated firms (i.e., telephone 
and cable) with industries which have never been regulated such as 
publishing, entertainment, and the computer industry.  Although players 
perceive numerous synergies among existing firms in these sectors, it is 
not obvious, a priori, which alliances will prove to be stable and 
beneficial to the firms involved, and to the public at large.

Oligopoly theory and game theory in particular, is the systematic study 
of strategic behavior. Game theory is no longer a branch of pure 
mathematics, and  it pervades modern economic thinking and analysis.  The 
informal insights it provides are increasingly used in business school 
case studies, theoretical and empirical research by telecommunications 
specialists and by strategic planners within the industry. Game theoretic 
reasoning can be applied to practical decision-making by corporations.  
In a business environment, those who think strategically not only attempt 
to outplay their adversaries, but in addition realize that their 
adversaries will attempt to outplay them.  An understanding of good 
competitive strategy can be essential for survival.  

In order to explore the informal, largely non-technical, insights that 
theory can contribute to questions of current importance in the 
telecommunications industry, industry representatives, regulators and 
academics are invited to take part in this symposium.  The objective is 
to provide an environment in which decision-makers will gain new insights 
into game theoretic reasoning and academic participants will gain new 
insights from the experiences 
of business leaders who have been involved in the formation of 
telecommunications alliances and the management of telecommunications firms.

The Symposium will consist of five half day sessions.  Each session will 
be coordinated by an academic or an industry representative.  The 
industry representative will introduce each topic and develop the key 
issues which need to be considered.  Approximately one half of the papers 
will be presented by academic specialists, while the other half will be 
applied papers presented by academics or industry representatives.  
Presenters and discussants will be urged to elicit an active 
participation from all of those in attendance.

Issues to be addressed will include (i) the theoretic framework for 
examining the role of strategic alliances.  Examples will be drawn from 
firms attempting to position themselves to maximum advantage in emerging 
communications, information processing, and entertainment markets, (ii) 
the convergence of technologies or the delivery of new services,  for 
example competition for video and multimedia delivery and among network 
providers, (iii) spectrum auctions role in business strategies in the 
emerging telecommunications structure, and (iv) interconnection and 
vertical integration as in the case of the simultaneous provision of 
local distribution and competitive services, and the negotiation of 
interconnection agreements and the appeal process.

Presentation of theoretical and applied papers will address these issues 
in a non-technical manner with the aim of being informative and 
provocative.  They will be used to provide a structure which will then be 
expanded upon through an active participation by all in attendance.

______________________________________________________________________________________________________________________________

1.  Strategic Alliances

This theme will develop the economic framework for the symposium.  It 
will consider how telecommunications carriers approach strategic 
alliances to improve their position in emerging communications, 
information processing, and entertainment markets in a 
economic/game-theoretic framework.  Issues of interest include 
international alliances (e.g., Telef�nica's strategy in Latin America or 
Cable & Wireless' global network), inter-industry alliances (e.g. the 
failed merger of Bell Atlantic and TCI), the provision of end-to-end 
services (Syncordia), and vertical integration into information services 
(Ameritech's investment in GEIS).  

2.  Convergent Technologies

The convergence of technologies bringing together, in direct competition 
or in strategic alliances, telephone companies, cable television 
operators and content providers. Decision-makers are challenged to 
establish boundaries to their business and position it in an increasingly 
complex production chain in the rapidly evolving technical and business 
environment. The object of this theme is to use the experience of 
multimedia to address the complex set of issues concerning horizontal and 
vertical integration.  

3. Competition for Spectrum:  Auctions

Spectrum auctions are now a  required component of the strategic planning 
process.  The recent auctions have indicated the value of the spectrum, 
and its importance in the coming competition in the wireless market. As 
competition expands, technologies converge, and  we move to a world 
characterized by a network of networks, spectrum and its cost will become 
even more important than today, and its strategic implications will be of 
a greater importance to the various players.  

The  FCC is about to begin auctions for broadband PCS licenses.  
Preliminary estimates are for the auction proceeds to exceed $10 
billion.  These auctions pose numerous auction design problems for the 
FCC, and strategic bidding problems for bidders.  This session will 
discuss both relevant auction theory and how the auctions are proceeding.

4.  Interconnection

The objective of the next two sessions will be to cover interconnection 
in the context of vertical integration and market dominance.  Exchange 
telephone companies currently are dominant players in the local loop, 
which is an input into the provision of their own interexchange services 
and those of their competitors.  One of the key issues of interconnection 
policy is the set of rules under which interconnection is negotiated.  
For example, when interconnection involves a co-location agreement, what 
is the power of the government to impose conditions on a regulated firm?  
What is the proper role of antitrust legislation to provide a framework 
for interconnection negotiations?  The Court fight between Telecom New 
Zealand and Clear Communications illustrates a fundamental problem with 
interconnection whenever it is not mandated by the regulator.   

In Mexico, regulators from the Communications and Transportation Ministry 
recently rejected the Telmex plan for 10 interconnection points.  
Instead, the regulators approved a plan for 200 such points, to be 
available by the year 2000.  The issue is the terms under which the 
privatized Telmex will face competition.

Are standards requires for interconnection? If so, how are the rules and 
obligations impacted by the standards set?  How do co-location, 
divestiture strategies (e.g., proposals made by companies such as 
Rochester Telephone and Ameritech to trade greater access to the local 
loop for greater regulatory freedom) enter the picture?  

At the other end of the spectrum, the access charges which were imposed 
by the FCC at the divestiture of the Bell System illustrate the problems 
with solutions which are unilaterally mandated by the regulator without 
proper attention to market conditions and alternative delivery 
technologies.    Pricing of interconnection as an intermediate or 
"bottleneck" facility should ensure neither the incumbent nor the entrant 
is disadvantaged by the pricing structure.  Moreover, in the context of 
alternative delivery systems, such as the AT&T/McCaw Communications 
alliance or the bypass of the exchange carriers by companies such as 
TeleCommunications Inc. subsidiaries, the correct access prices become 
vital to insure efficiency of the total system.  

The worldwide trend toward privatization and deregulation of public 
carriers raises these issues in a broader context.  


_____________________


Boulder

The University of Colorado  at Boulder is situated in a lovely natural 
setting about 30 miles northwest of Denver.  The Front Range of the Rocky 
Mountains is visible from the 786-acre campus, located in a scenic 
valley  5,400 feet (1645 m) above sea level.  The campus is less than 45 
minutes form the Denver airport by car or shuttle service.  (Limited 
lodging is available on campus.)

Boulder, a community of 84,000 people, averages over 300 days of sunshine 
each year.  Within its mountain setting of great natural beauty, Boulder 
provides a rich array of recreation and cultural opportunities.  
World-class skiing is a short drive away.

________________

Registration Information 

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Attendees should respond by mail , facsimile, or phone, 
forwarding check or credit card authorizations to:

Strategic Alliance Symposium
Interdisciplinary Telecommunications Program 
Campus Box 530 
Engineering Center 
University of Colorado 
Boulder, Colorado  80309-0530, USA

Telephone:  	+ 1 303 492 - 8717
Facilmile:  	+ 1 303 492 - 1112
E-mail:  	alleman@spot.colorado.edu

Registration Fees:
(includes lunches, dinner  and receptions)

Early Registration:             $400.00
(before December 12, 1994)
Registration Fee:               $500.00

 ______________________________________________________________________________________________________________________________

Provisional Program

Sunday, January 8, 1995

Registration, 1:00 - 5:00 PM

Social Hour:  6:30 - 7:30 PM

Monday, January 9, 1995

Strategic Alliances: Overview, 9:00 - 10:30 AM
	Chair:  Ambassador Diana Lady Dougan,  Center for Strategic & 
International Studies
Robert Crandall, Brooking Institute
Jonathan D. Aronson, University of Southern California
William Sharkey, Institut D'Economie Industrielle
	Discussant:  Francois Prothais, France Telecom

Strategic Alliances: Theory & Practice I, 11:00 - 12:30 PM
	Chair:  Larry Singell, University of Colorado
Andres Baude, Ameritech International, Inc.
Peter Strapp, Tele-Communications Inc.
Susan C. Simon, Simon & Simon
	Discussant:  Daniel O'Brien, Department of Justice

Lunch, 12:45 - 1:45
Gary Hart, Coudert Brothers

Strategic Alliances:  Vertical Integration, 2:00 - 3:30
	Chair:  Mark Cronshaw, University of Colorado 
Martin Perry, Rutgers University
Yossi Spiegel, Tel Aviv University 
Nicholas Economides, New York University
	Discussant: Ferid Gasmi, Institut D'Economie Industrielle

Strategic Alliances: Theory and Practice II, 4:00 - 5:30
	Chair: Gary Hart, Coudert Brothers
Mark Porrat, General Magic *
Koichiro Hayashi, NTT America
Keisuke Nakasaki, Thai Telecommunications
Marc Ivaldi, Institut D'Economie Industrielle
	Discussant:  John Vondrus, US West Communications

Reception, 6:00 - 8:00 PM
Tu, Jary 10, 1995

Competition for Video Delivery, 9:00 - 10:30
	Chair:  Joseph Pelton, University of Colorado 
Lorenzo Pupillo, It�lia Telecom  *
Thomas Hazlett, University of California, Davis *
Glenn Woroch, University of California, Berkeley
	Discussant: David Reed, Cable Laboratories *





Competition for Spectrum:  Auctions, 11:00 - 12:30
	Chair:  James Alleman, University of Colorado
Mark Bykowsky, National Telecommunications and Information Agency
Simon Wilkie, California Institute of Technology 
Yeon Koo Che,  University of Wisconsin 
	Discussant:  Robert Pepper

Lunch, 12:45 - 1:45

Convergence of Media, 2:00 - 3:30
	Chair: Randall Lowe, Piper & Marburry
Larry J. Yokell, Convergence Industry Associates
Shane Greenstein, University of Illinois / Stanford University
David Sevy, France Telecom, CNET
	Discussant: Glenn Woroch, University of California, Berkeley 

Interconnection, 4:00 - 5:30
	Chair: Robert Pepper, Federal Communications Commission *
P. Srinagesh; Bellcore
Oz Shy, Tel Aviv University
Eli Noam, CICT, Columbia University
	Discussant:  Dale Hatfield, Hatfield Associates, Inc.

Receptions and Dinner, 7:00
Ambassador Vonya McCann, United States Department of State *

Wednesday,  January 11, 1995

Joint Ventures & Privatization I, 9:00 - 10:30
	Chair: Mark Schankerman, LSE & European Bank for Reconstruction 
and Development
George Yarrow,  Oxford University *
John Vondrus, USWest Communications
Leland W. Schmidt, GTE Telephone Services
	Discussant: Santiago Levy Algazi, National Commission on Competition 
Telmex, Mexico *

Strategic Alliances & Capital Markets, 11:00 - 12:30 PM
	Chair: Larry J. Yokell, Convergence Industry Associates
Larry Darby, Darby Associates 
Scott Meade, Goldman Sachs, United Kingdom *
John Chapman, Strategic Research Inc.
	Discussant: David Rush, University of Colorado
____________________________________________________________________

Participants

James Alleman, University of Colorado 
Santiago Levy Algazi, National Commission on Competition Telmex, Mexico 
*
Jonathan D. Aronson, University of Southern California *
Andres Baude, Ameritech International, Inc.
Mark Bykowsky, National Telecommunications & Information Agency 
Larry Cole, GTE Labortories 
John Chapman, Strategic Research Inc.
Yeon Koo Che, University of Wisconsin
Robert Crandall, Brookings Institute
Mark B. Cronshaw, University of Colorado
Larry Darby, Darby Associates
Micheal Davies, BellSouth New Zealand *
Hugo Dixon, The Financial Times *
Ambassador Diana Lady Dougan,  Center for Strategic and International 
Studies
Jerry Duval, Federal Communication Commission
Nicholas  Economides, Stern Business School, New York University
Michal Even-Chen, BEZEQ, Israel *
Ferid Gasmi, Institut D'Economie Industrielle
Michel Gensollen, France Telecom *
Shane Greenstein, University of Illinois / Stanford University
Gary Hart, Coudert Brothers
Koichiro Hayashi, NTT America
Thomas Hazlett, University of California, Davis *
Larry Irving, National Telecommunications & Information Agency  *
Marc Ivaldi, Institut D'Economie Industrielle
Mike Katz, University of California, Berkeley and Federal Communications 
Commission *
Frank Kiss, MATAV *
Jose Alberto Blanco Losada, Telef�nica de Espa�a * 
Randall Lowe, Piper & Marburry
Scott Meade, Goldman Sachs, United Kingdom *
Patrick McCabe, Ministry of Commerce, New Zealand 
Vonya McCann, Ambassador, United States Department of State *
Bridger Michell, Charles Rivers Associates *
Milton Mueller, Rutgers University
Keisuke Nakasaki, Thai Telecommunications
Eli Noam, CITI, Columbia University
Daniel O'Brien, Department of Justice 
Hajime Oniki, Osaka University *
Joseph Pelton, University of Colorado
Robert Pepper, Federal Communications Commission *
Mark Porrat, General Magic *
Francois Prothais, France Telecom  
Lorenzo Pupillo, It�lia Telecom 
Patrick Rey, ENSEA/INSEE *
David Reed, Cable Laboratories *
David Rush, University of Colorado
David Salant, GTE Laboratories 
Mark Schankerman, London School of Economics & European Bank for 
Reconstruction and Development
David Sevy, France Telecom, CNET
William Sharkey, Institut D'Economie Industrielle
Oz Shy, Tel Aviv University *
Susan C. Simon, Simon & Simon
Larry Singell, University of Colorado * 
Ray Smith, Director, BT Carrier Services *
Yossi Spiegel, Tel Aviv University
Peter Strapp, Tele-Communications Inc.
Pablo Spiller, University of California, Berkeley
P. Srinagesh; Bellcore
Marty Taschjian, US West Communications
John Vondrus, US West Communications *
Simon Wilkie, California Institute of Technology
Glenn Woroch, University of California, Berkeley 
Larry J. Yokell, Convergence Industry Associates

                                                                * Invited



 Sponsors

AGT (formerly Alberta Government Telephone)
France Telecom
GTE Telephone Operations
GTE Laboratories
Italia Telecom
NTT America
Hellenic Telecommunications Organization (OTE)
TELA Group
Telefnica de Espa�a
Telia (formerly Swedish Telecom)
University of Colorado
_____________________
Program Committee

James Alleman, University of Colorado
Mark B. Cronshaw, University of Colorado 
Nicolas Curien, Ecole Polytechnique
Nicholas Economides, New York University
Alain de Fontenay, TELA Group
Koichiro Hayashi, NTT America
Milton Mueller, Rutgers University
Mark A. Schankerman, London School of Economic & European Bank for 
Reconstruction and Development
Leland W. Schmidt, GTE Telephone Operations
William W. Sharkey, Institut D'Economie Industrielle
David Salant, GTE Laboratories
Glenn Woroch, University of California, Berkeley

____________________________________________________________________________


-Jim Alleman, alleman@spot.Colorado.EDU