Assignment problem:
On the island of Velasco, there is only one firm, Vel-Phone, in the mobile communications industry. The mobile communication industry provides mobile phone service, which allows different users to call and text each other. Vel-Phone has proprietary technology that ensures that phones that work on its network will not work on any other networks. Everyone in Velasco has a mobile phone plan from Vel-Phone and owns a phone that works on Vel-Phone's communication network. Historically, the government of Velasco has given Vel-Phone a monopoly on phone service (e.g., they are the only network connecting mobile phone users). However, the government has decided to deregulate the industry, which means that new firms can now enter the industry.
Question: An equity analyst's recent report suggests that new entrants will be unlikely to enter successfully, thus the threat of new entry is low. Provide two potential explanation that justifies this claim.