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Introduces the notion of TFTZ's -- a geographically defined market in which any entrant meeting minimum qualifications would be permitted to offer, on a"take-all-comers" basis within the zone, the full array of telecommunications services, including local exchange switched services. Prices and terms of these services would be left to the market rather than the devices of the utility regulator. The regulator, however, would retain three crucially important resident powers: oversight, insurance against discrimination, and customary ratemaking powers.
The telecommunications industry has evolved into a very competitive industry since 1980. Aggressive competition is the norm in the long distance, equipment, operator services and many other segments of the industry. The remaining segment of the market without widespread meaningful competition is the "last-mile" wireline service to the customer premise. Incumbent local exchange carriers enjoy a monopoly to serve nearly all residences and most business customers, collecting over 99% of all local exchange service revenues. Using their monopoly status, incumbents have developed a cross-subsidy system which uses the rates paid by some customers to lower the rates paid by others to support a policy known as "universal service." This policy has resulted in telephone service reaching 94% of America's households. Carriers claim that this policy cost them $20 billion annually, potential entrants claim the true cost is as low as $4 billion and the rest is profit. In the Telecommunications Act of 1996, Congress ordered the end of the local exchange monopoly and opened the local markets to competition. Congress also specified the continuation of universal service, specified that telephone penetration should be increased and specified that the universal service concept will be applied to America's schools, libraries and rural health centers. Congress also specified that, unlike today, all carriers will contribute fairly and equitably fairly to the universal service fund and that all carriers providing local service, including new competitors, will be eligible to receive support from the fund. The cost to meet these requirements in a competitive environment totals $7.2 billion, or 5.1% of net carrier revenue. This thesis addresses the definition of universal service and the services that should be eligible for support, the new competitive environment, how to collect the universal service support fund, and how to best distribute the funds to customers targeted to receive support from the system: those in high-cost areas, low-income consumers, and schools and libraries for advanced communications services.
This book discusses local competition in the telecommunications sector.
The U.S. telecommunications industry has undergone dramatic changes in recent years that have touched almost every American home and business. The average American can dial almost anywhere in the world directly, store and forward a message, or transmit a fax in less than a minute; often for less than the real cost of a 500-mile telephone call tweny-five years ago. The combination of telecommunications breakthroughs, competition among new and old carriers, and the AT&T breakup has transformed the telephone industry and provided customers with a new array of equipment and services. Robert W. Crandall examines the effects of the AT&T breakup and weighs the costs and benefits to the residential and business consumer. On balance, he finds that the efficiency gains from opening up the telephone industry have more than offset the possible efficiency losses, which may be caused by the sacrifice of economies of scale and scope or the absence of fully compatible equipment and services. The replacement of regulation with competition has led to greater productivity in the telephone industry, a more efficient rate structure, and lower equipment prices. Crandall traces the telecommunications evolution from its early beginnings as pairs of copper wires up through the historic 1982 decision to divest. He investigates the impact of technological changes, competition, and the advent of divestiture on the quality of service, local and interexchange service rates, productive efficiency, and income distribution. He also focuses on problems that linger after the breakup in the increasingly competitive but highly regulated sector.
Examines recent developments in the telecommunications industry. Witnesses: James Young, v.p. & general counsel, Bell Atlantic Corp.; James Ellis, Sr. exec. v.p. & gen. counsel, SBC Commun., Inc.; Bernard Ebbers, pres. & ceo, LDDS WorldCom; Michael Salsbury, exec. v.p. & gen. counsel, MCI Commun. Corp.; William Barr, sr. v.p. & gen. counsel, GTE Corp.; Robert Atkinson, sr. v.p., legal regulatory & exernal affairs, Teleport Communications Group, Inc.; Peter Huber, sr. fellow, Manhattan Inst. for Policy Research; Robert Crandall, Sr. fellow, Brookings Institution; Ronald Binz, pres., Competition Policy Inst.; & Dale Hatfield, ceo, Hatfield Assoc., Inc.