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Service Quality and the Impact of Incentive Regulation in Telecommunications in the United States

Author

Listed:
  • Uri , Noel D.

    (Industry Analysis Division, Media Bureau, Federal Communications Commission)

Abstract

Incentive regulation in the form of price caps was adopted for interstate access service in 1991 as a way to provide local exchange carriers with an incentive to improve their productive efficiency. An issue that has arisen with the adoption of price cap regulation is whether a deterioration of service quality for interstate access service has been an unintended consequence. The analysis in this paper uses several different measures of service quality, including the average installation interval, the percent of commitments met, total trouble reports, and the average repair interval for both switched access service and special access service, to investigate empirically whether there has been a decline in service quality between 1991 and 2000. The results are conclusive. Overall service quality has fallen. To rectify the situation, a proposal is offered to adjust the price cap index to penalize LECs who fail to provide an acceptable level of aggregate service quality.

Suggested Citation

  • Uri , Noel D., 2003. "Service Quality and the Impact of Incentive Regulation in Telecommunications in the United States," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 56(4), pages 499-523.
    • Handle: RePEc:ris:ecoint:0151
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    Citations

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    Cited by:

    1. Reichl, Johannes & Kollmann, Andrea & Tichler, Robert & Schneider, Friedrich, 2008. "The importance of incorporating reliability of supply criteria in a regulatory system of electricity distribution: An empirical analysis for Austria," Energy Policy, Elsevier, vol. 36(10), pages 3862-3871, October.
    2. Xie, Li & Kong, Chun, 2024. "Electricity user connection pricing strategy: The incomplete contract theory perspective," Energy Economics, Elsevier, vol. 132(C).
    3. Michael Schmidthaler & Jed Cohen & Johannes Reichl & Stefan Schmidinger, 2015. "The effects of network regulation on electricity supply security: a European analysis," Journal of Regulatory Economics, Springer, vol. 48(3), pages 285-316, December.
    4. Lætitia Guérin-Schneider & Michel Nakhla, 2012. "Emergence of an innovative regulation mode in water utilities in France: between commission regulation and franchise bidding," European Journal of Law and Economics, Springer, vol. 33(1), pages 23-45, February.
    5. Uri, Noel D., 2003. "The adoption of incentive regulation and its effect on technical efficiency in telecommunications in the United States," International Journal of Production Economics, Elsevier, vol. 86(1), pages 21-34, October.
    6. Facanha, Luis Otavio & Resende, Marcelo, 2004. "Price cap regulation, incentives and quality:: The case of Brazilian telecommunications," International Journal of Production Economics, Elsevier, vol. 92(2), pages 133-144, November.

    More about this item

    Keywords

    Incentive regulation; access service; service quality; telecommunications;
    All these keywords.

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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