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Did federal regulation discourage facilities-based entry into US local telecommunications markets?

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  • Quast, Troy

Abstract

In the United States from 2001 to 2006, federal regulations allowed entrants to lease from incumbents at relatively low cost all of the network infrastructure necessary to provide local phone service. These platform entrants could then provide phone service without installing any of their own equipment. Advocates of this policy claimed that it was needed to provide an economically feasible means by which entrants could serve residential customers. Critics contended that the policy substantially deterred loop entry whereby entrants installed their own switching equipment. An analysis of panel data for each state over this period indicates that the policy's critics may have been correct. The cross-price elasticity of loop entry with respect to platform price was roughly 1.0. A back of the envelope calculation suggests that loop entry may have decreased by roughly 20% due to platform entry price reductions.

Suggested Citation

  • Quast, Troy, 2008. "Did federal regulation discourage facilities-based entry into US local telecommunications markets?," Telecommunications Policy, Elsevier, vol. 32(8), pages 572-581, September.
    • Handle: RePEc:eee:telpol:v:32:y:2008:i:8:p:572-581
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    Cited by:

    1. Moreno, Plácido & Lozano, Sebastián & Gutiérrez, Ester, 2013. "Dynamic performance analysis of U.S. wireline telecommunication companies," Telecommunications Policy, Elsevier, vol. 37(6), pages 469-482.

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