Telecommunications, the Transition from Regulation to Antitrust

In recognition of the fact that the competition among telecommunications platforms that demands deregulation is not ubiquitously effective, I endorse and expatiate on the objective 'bright line' test proposed by the Canadian company TELUS for determining when and within what geographic market boundaries to deregulate. In accordance with that test, I then discuss the nature of the antitrust policy upon which falls responsibility for preserving the competition that is the logical surrogate for direct regulation. Following the rule of reason prescribed by the United States Supreme Court 95 years ago, I would have that policy concentrate on the behavior of the incumbent access providers and the intent that may logically be inferred from it. Finally, applying the two preceding expositions to the highly politically charged, largely ideological demands for a legislatively imposed rule of "network neutrality," I contend that if the two previously recommended policies are followed, such a legislative mandate would be both supererogatory and counterproductive.Technology and Industry, Regulatory Reform

Network Neutrality

Much of the advocacy of legislatively-mandated network neutrality is based on a simple fallacy, namely, that differing charges to suppliers of content to the Internet for correspondingly differing speeds of delivery are inherently discriminatory. They are not; and an attempt to prohibit them would prevent the Internet's offering a full range of services, with widely diverging tolerances for latency. Preservation of the open end-to-end character of the Internet may well, however, require vigilant prohibition of vertical squeezes and other unfair methods of competition and authority of an antitrust agency to compel interconnections.

Deregulation: Looking Backward and Looking Forward

We have a surfeit of deregulatory anniversaries to celebrate or deplore: it is now more than thirty years since the Federal Communications Commission (FCC) authorized substantial competition in long-distance communications, more than eleven since we deregulated the airlines, and almost ten years since we did substantially the same to the railroad and trucking industries. Can we, by examining this long and varied experience with deregulation, draw any conclusions about the likelihood and desirability of its continuation in the decade ahead

The Threat of Latter-Day "Progressives" to an Authentically Liberal Economic Policy

The assumption of Democratic control of Congress last year and the probability that its majority will be increased by this year's elections portends a growing, deeply troubling ideological split within its ranks, already visible, on matters of economic policy generally and regulatory policy specifically'between the more radical (and at the same time reactionary) populists, who label themselves 'Progressives', and the 20th century liberals, who have dominated in the formulation of their party's economic programs for the last three-quarters century. This paper examines the economic issues on which the two are likely to diverge, defending and proposing policies consistent with historical 18th through 20th century liberalism:

The Pricing of Inputs Sold to Competitors: A Comment

With the progressive introduction of competition into the traditional public utility industries, it becomes necessary for regulators to ensure access of competitors to the bottleneck facilities controlled by the incumbent monopolists on terms consistent with efficient competition. Efficient component pricing correctly solves that problem: under its rules, competition is enabled to achieve first-order, technical efficiency. The rule is also consistent with allowing competition to promote dynamic efficiency, although achieving this goal also requires reforming traditional cost-plus regulation. The Baumol and Sidak rule does not in itself, however, permit competition to fulfill its other functions of eroding monopoly profits and promoting allocative efficiency. It can therefore be permitted only when the charges for the essential inputs are regulated, so as to ensure that any markups above marginal costs in those charges are no greater than is necessary to afford the challenged utility companies a fair opportunity to earn a return on their invested capita