The break-up of the monolithic state-owned post and telecommunications enterprises from the 1980s was a central feature of the first phase of the privatisation process. Although much has been made of the ideological lead offered by the USA and by the privatisation of British Telecom, much of the institutional change can be better understood as a product of technological and economic developments, which undermined the case for publicly owned monopolies. With this in mind, it is useful to highlight four features of telecommunications that affect the institutional setting. The central activity is the transmission, at low running costs, of voice or visual images across a network of lines with the information routed by switching exchanges. Such public switching telephone networks have all the characteristics of natural monopolies – qualified to some extent when satellite and cable facilities are also available. This information is then received and processed at terminals (telephones, computers, fax machines etc.). Thirdly, given the complex nature of the equipment, some economic gains could accrue from having national or international specification standards. Fourthly, telecommunication networks have the property that, if a new connection is set up (a new telephone subscriber for example), there are benefits accruing not only to the new subscriber but to the rest of the existing subscribers, each of whom now has a potentially new contact. In economic terms, the social cost of a new connection is less than its private cost. These characteristics suggest that we might expect an industry with the following features.