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The economic theory of regulation and the US telecoms industry

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  • Wenders, John T.

Abstract

The usual outcome of the economic theory of regulation is that regulatory processes will be dominated by the few who have much to gain, at the expense of the many who will lose. This paper argues that this is not the outcome of political-regulatory choice in the US telecommunications industry. Regulatory authorities were here able to administer a toll-to-residence subscriber subsidy mechanism. This resulted in the AT&T divestiture and the FCC's efforts to end these subsidy flows. Unless the politically popular subsidy scheme is ended, competition is likely to produce a bifurcated US telecommunications network with most of the large users either bypassing the local network or migrating to discounted toll offerings.

Suggested Citation

  • Wenders, John T., 1988. "The economic theory of regulation and the US telecoms industry," Telecommunications Policy, Elsevier, vol. 12(1), pages 16-26, March.
    • Handle: RePEc:eee:telpol:v:12:y:1988:i:1:p:16-26
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    Cited by:

    1. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    2. P Cooke, 1992. "Some Spatial Aspects of Regulatory and Technological Change in Telecommunication Industries," Environment and Planning A, , vol. 24(5), pages 683-703, May.

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