Telecommunications Liberalization on Two Sides of the Atlantic

Notes

79 Notes Chapter 1 Telecommunications Policy in North America and Europe 1. A few countries were given derogations. Chapter 2 Telecommunications Policy Reform in the United States and Canada 1. The Telecommunications Act was signed into law by President Bill Clinton on February 8, 1996. 2. See MCI Telecommunications Corp. v FCC, 561 F .2d 365 (D.C. Cir. 1977), cert. denied, 434 U.S. 1040; and MCI Telecommunications Corp. v FCC, 580 F .2d 590 (D.C. Cir. 1978), cert. denied, 439 U.S. 980 (1978). Liberalization of terminal equipment, although contested by state regulators, proceeded far more rapidly in the late 1970s. 3. The FCC preempted state rate regulation in 1986, but a federal appeals court narrowed this preemption to wireless interstate services in 1987. NARUC v. FCC, No. 86-1205 (D.C. Cir. 1987). 4. The 1984 consent decree created 161 local access and transport areas within which the divested RBOCs could offer long-distance service. However, the RBOCs could not provide service between LATAs, even those in the same state or wholly within the RBOC’s region. In effect, this limited the RBOCs to service areas comprising about 20 percent of all long-distance service. 5. See Hausman (1997, pp. 1–38). 6. P. L. 104-104, 110 Stat. 56. 7. Telecommunications Act of 1996 Conference Report, 104 Cong. 2d sess., Report 104-458 (Government Printing Office, January 31, 1996), p. 1. 8. See FCC web page, http://www.fcc.gov/Reports/telecom-rpt.html. 9. Telecommunications Act of 1996, sec. 253, “Removal of Barriers to Entry.” 10. Telecommunications Act of 1996, sec. 251, “Interconnection,” (3), (4). 11. See Hazlett (1999). 12. For further analysis of the act, including many of the regulatory issues we exclude from our paper, see Kellogg, Thorne, and Huber (1996). 13. Equal access refers to the ability of competitive carriers to offer interconnected services without discrimination. In long distance, it has generally meant that customers of nondominant firms not find it necessary to dial additional numbers or pay additional tolls in order to substitute carriers. 14. See MacAvoy (1996). 15. This is not an antitrust market because long-distance carriers offer both intra-LATA and inter-LATA services and thus compete to some extent with local-exchange carriers. Moreover, one might argue that large businesses and residential customers are in different markets. The Bell companies cannot compete in the inter-LATA market in most states yet, and long-distance carrier participation in intra-LATA markets was impeded by state regulators until 1999. Therefore, including local-exchange carriers’ long-distance revenues—equal to 15 to 20 percent of all long-distance revenues—in the tabulations in table 2-2 would be misleading. 16. The HHI is the sum of the squared market shares for all market participants . An HHI of 2,500 is roughly equivalent to that generated by an industry with four firms of equal size. 17. Taylor and Taylor (1993). 18. See Robert Hall, Affidavit on Behalf of MCI, U.S. Federal Communications Commission, In the Matter of Application of SBC Communications, Inc., Pursuant to Section 271 of the Telecommunications Act of 1996 to Provide InRegion , InterLATA Services in Oklahoma (April 1993). 19. See MacAvoy (1996). 20. These are average prices for domestic interstate calls (United States) and for national calls (Canada). 21. Sprint Canada’s rate. See www.fonorola.com. 22. See Crandall and Waverman (1996). 23. There are fixed marketing, billing, and administrative costs that must be covered from revenues, but these costs are increasingly being recovered on a flat monthly basis. Marginal prices should not reflect these costs, assuming healthy competitive market constraints. 24. Such entry has now been authorized by the FCC in five states: New York, Massachusetts, Texas, Oklahoma, and Kansas. 25. TNS, Bill Harvesting data. 26. This estimate was derived by Jeffrey Rohlfs and Robert Crandall in FCC comments submitted in support of the CALLS proposal in 1998. CC Docket nos. 96-262, 94-1, 99-249, and 96-45. 80 NOTES TO PAGES 11–19 27. See Hausman (1997). 28. For a description and critique of this methodology, see Kahn (1998); Hausman (1999a, 1999b). 29. Jeremy Pelofsky, “Appeals Court Throws Out FCC Access Price Model,” Reuters, July 19, 2000. 30. Many states have uniform wholesale rates for unbundled elements despite large cost differences that exist between dense areas and more rural areas. In table 2-3, the rates are for the...