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Pricing Unbundled Network Elements and the FCC's TELRIC Rule: Economic and Modeling Issues

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  • Tardiff Timothy J.

    (National Economic Research Associates)

Abstract

This paper addresses the fundamental question of what costs and prices would look like under competitive conditions and how close the FCC's total element long-run incremental cost (TELRIC) pricing rules allow one to approximate such competitive outcomes. We consider: what types of firms would enter in competitive network industries, what effect would new entry have on the asset values and prices of incumbent firms, and what impact would competition have on (1) the types and vintages of capital equipment, (2) prices for that equipment, and (3) conditions in the operating environment? The paper concludes by highlighting alternative pricing proposals offered by contending parties and identifying the major drivers that explain what have proven to be large differences among competing proposals.

Suggested Citation

  • Tardiff Timothy J., 2002. "Pricing Unbundled Network Elements and the FCC's TELRIC Rule: Economic and Modeling Issues," Review of Network Economics, De Gruyter, vol. 1(2), pages 1-15, September.
    • Handle: RePEc:bpj:rneart:v:1:y:2002:i:2:n:5
    DOI: 10.2202/1446-9022.1010
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    Citations

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    Cited by:

    1. Sappington, David E.M., 2006. "On the design of input prices: Can TELRIC prices ever be optimal?," Information Economics and Policy, Elsevier, vol. 18(2), pages 197-215, June.
    2. Rogerson William P, 2011. "On the Relationship Between Historic Cost, Forward Looking Cost and Long Run Marginal Cost," Review of Network Economics, De Gruyter, vol. 10(2), pages 1-31, June.
    3. Kenneth Fjell & Debashis Pal & David Sappington, 2013. "On the performance of endogenous access pricing," Journal of Regulatory Economics, Springer, vol. 44(3), pages 237-250, December.
    4. Neu, Werner & Kulenkampff, Gabriele, 2009. "Long-Run Incremental Cost und Preissetzung im TK-Bereich: Unter besonderer Berücksichtigung des technischen Wandels," WIK Discussion Papers 323, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    5. Guthrie, Graeme & Small, John & Wright, Julian, 2006. "Pricing access: Forward-looking versus backward-looking cost rules," European Economic Review, Elsevier, vol. 50(7), pages 1767-1789, October.
    6. Timothy Tardiff, 2015. "Prices based on current cost or historical cost: How different are they?," Journal of Regulatory Economics, Springer, vol. 47(2), pages 201-217, April.

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