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dimension and included within any of the five forces(Binde 2006).Although over the recent years competitiveness intelecommunications sector in Latvia has experiencedrapid growth due to several objective factors, forinstance, economic development of the country resultingin increasing demand for telecommunication services andincreasing quality requirements of the service set forth bycustomers, competition in the sector is not evaluated asvery strong. This is mainly determined by specificity ofthe sector, as well as state policy for stimulatingcompetition in the sector.In this paper the author has analyzed competition inthe telecommunications sector as well as possibilities toregulate it from various aspects - its economic, legal andsocial interpretation, as well as has assessed influence ofthe administrative regulation on the telecommunicationsindustry in Latvia.ECONOMIC INTERPRETATION OFCOMPETITION - DEFINITIONSEconomic and business interpretations ofcompetitiveness are closely related and are associatedwith rivalry. Goods and services will be obtained fromthe company ensuring, according to customer, “more forthe same amount of money”. Thus, competition strives toremunerate the manufacturers and/or suppliers workingmost efficiently and directs the economy towards moreefficient use of resources (Friedman 2000).From the businesses point of view competition is arivalry between manufacturers of goods present in themarket and/or service providers (merchants) for suchgoods manufacturing and services providing terms thatwould ensure for them long-term profit.At the same time competition is a mechanism thatregulates proportions in manufacturing. The two keyforms of competition are price and non-price. Theseforms of competition are active at a time and in mutualinteraction (Niedritis 2001) (page 6).Customer, who taking into account its own interest,chooses goods or services, ensures objectivity of anycompany’s evaluation. Competition is the most efficientand cheapest control method of economics that does notcost much to the public. Such control is an important anddynamic force and makes the manufacturer and seller tothink and act in order to reduce costs and price, byincreasing sales volume in order to improve quality ofgoods (services) and, what is most important, to fight forclients and orders (Niedritis 2001) (page 9).Uninterrupted improvement of processes and methodsunder healthy competition results in reduction ofexpenses. Consequently, quality of goods and servicesincreases. Innovation creates new and better approachesto production and service providing processes andspreads rapidly. Market players that are unable tocompete are forced to reorganize or to leave the market.Prices decrease due to increased volumes and the marketexpands. Such, according to Porter [8] is the pace ofdevelopment for well-functioning industries, for instance,computers and informatics industry, mobiletelecommunications, bank business and many others.CIVIL RIGHTS AREA, REGULATION, ANDCOMPETITIONMerchant, when developing commercial policy andestablishing commercial relations with clients,cooperation partners, suppliers acts in the area of civilrights.Principle of private autonomy is the main principle inthe area of civil rights, which establishes that eachsubject of civil rights may act freely by using its owndiscretion. This includes also the freedom to establish oravoid establishing legal relations with other persons byusing one’s own subjective judgement.Yet, the freedom guaranteed by principle of privateautonomy has restrictions (Porter 2004). Restrictions toprivate autonomy set by the state are very different andserve different purposes – especially for protection of theother contracting party, ensuring rights of minority inassociations of persons or protection of other publicinterests.Depending on the specific public interest, the stateprovides for different imperative restrictions of differentintensity, prohibitions to perform certain activities aswell as performs regulation of activities in specificindustries. In the first case the respective merchant has anobligation to obey norms of legislation and respectrestrictions imposed by the state, while the stateinstitutions supervise adherence to the respective norms(ex-post regulation).However, in the second case state institutions monitormarket development regularly and impose regulatingduties on a merchant, based on its economic status in themarket, to avoid competition problems in future (ex-anteregulation).Regulation as a state supervision and controllingmeans in Western-type economics is characteristic onlyin very specific cases, to satisfy specific public needs.The Oxford Dictionary for the Business World (TheOxford 1993) defines the term „regulation” asgovernment rules that govern decisions of companies,especially monopolies or oligopolies, to eliminate use oftheir market status for getting unfair benefit. Regulationmight be perceived as an alternative to nationalisation,Annual Proceedings of Vidzeme University College “ICTE in Regional Development”, 200679