Cost Proxy Models and Telecommunications Policy: A New Empirical Approach to Regulation, Volume 1

Front Cover
MIT Press, 2002 - Business & Economics - 257 pages
0 Reviews

The telecommunications industry defies easy characterization. The long-distance sector is highly competitive and the local exchange sector much less so, while digital transmission and switching have blurred the distinction between traditional voice communication and the transmission of video and data messages. Regulation of this industry has generally been considered necessary because it has aspects of a natural monopoly.

This book takes an empirical approach to natural monopoly and the need for regulation of telecommunications. The centerpiece of the analysis is a sophisticated engineering cost proxy model, the local exchange cost optimization model (LECOM). The book, which is largely methodological, shows that a combination of LECOM, econometrics, and simulations can aid policy discussion of such contentious issues as incentive regulation, natural monopolies, estimating the cost of interconnection among networks, and the obligation of universal service. The book presents a theoretical framework to explain the incentives of firms and the power of regulation and then uses LECOM to test the theoretical implications. The work is unusual in that it applies the foundations of regulation theory to a model of an industry rather than applying econometric theory to historical cost data. The book includes a CD-ROM containing the data set the authors used to analyze their model.

 

What people are saying - Write a review

We haven't found any reviews in the usual places.

Contents

Introduction
1
The Local Exchange Cost Optimization Model LECOM
15
The Use of LECOM under Complete Information
37
Regulation under Incomplete Information
51
The Natural Monopoly Test
65
Optimal Regulation of a Natural Monopoly
91
Comparison of Performance of Incentive and Traditional
113
Universal Service
133
Strategic Crosssubsidies and Vertical Integration
153
Conclusion
177
Appendix A
189
Preparation ofLECOM Cost Data
201
International Applications of HCPM
217
References 243
244
Copyright

Other editions - View all

Common terms and phrases

Popular passages

Page 244 - In the Matter of Regulatory and Policy Problems Presented by the Interdependence of Computer and Communications Services and Facilities, First Computer Inquiry, FCC Docket No.
Page 244 - Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), Final Decision, 77 FCC 2d 384 (1980), (hereinafter Computer II), recon..
Page 244 - Federal Communications Commission: Statistics of the communications industry in the United States for the year ended Dec. 31, 1942, containing financial and operating data relating to communication carriers and standard broadcast stations subject to the Communications act of 1934.

References to this book

About the author (2002)

D. Mark Kennet is Associate Professor of Telecommunications at George Washington University.