This paper discusses the interaction between competition and price regulation in telecommunications markets. First, we discuss how to achieve efficient entry when an incumbent's regulated retail prices are out of line with its costs. Second, the analysis is extended to the case where entrants need to purchase network services from the incumbent. Except in the extreme case where entrants have no alternative but to use the incumbent's network to provide their own services, I argue that (i) retail instruments should be used to combat retail-level distortions such as universal service obligations, and (ii) network access charges should be equal to the incumbent's cost of access (excluding opportunity costs) in order to achieve productive efficiency.