George Beard to Mr. Meredith (11 October 1962)

https://egrove.olemiss.edu/mercorr_pro/2130/thumbnail.jp

How to Use the Bromides:

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Market Definition and the Economic Effects of Special Access Price Regulation

Market definition is an essential ingredient to competitive and regulatory analysis. Yet, there is significant disparity regarding the definition of the relevant geographic market for high-capacity circuits, commonly referred to as Special Access services. Given the present debate over expanding price regulation in this sector, the importance of market definition on the expected economic effects of regulation is worth evaluating. In this article, we demonstrate that if geographic markets are “location specific” and supplied by a monopolist as the proponents of regulation claim, then price regulation reduces economic welfare in all instances. That is, even with monopoly supply, regulation offers no improvement in economic welfare, meaning the debates over the extent of competition and profit margins in such markets are irrelevant. The effect of regulation is mostly to transfer profits from sellers to buyers, so the debate appears to be largely a squabble over rents. That said, every $1 of transfer costs more than$1 to society, so regulation reduces welfare. This analysis demonstrates that the present case for regulating high-capacity services is woefully inadequate and poorly conceived

A Policy Framework for Spectrum Allocation in Mobile Communications

With the National Broadband Plan\u27s promise of an additional 500 MHz of spectrum for commercial purposes, the question of how to allocate those resources among competing uses and users will dominate the communications policy debate over the coming years. In this Article, the Authors provide a theoretical analysis of some of the relevant tradeoffs involved in allocating spectrum among service providers, with a particular focus on incumbent exclusion rules such as spectrum caps. Two key assumptions center the analysis: (i) more firms implies lower prices (i.e., Cournot competition); and (ii) more spectrum permits more advanced services due to greater capacity and throughput. The derived theoretical tradeoff is straightforward: In a setting with many firms with little spectrum, there are low prices but relatively less advanced services; however, in a setting with fewer firms with larger allotments of spectrum, there may be higher prices but also more advanced services. The Authors\u27 analysis highlights several key components of the spectrum allocation decision. First, an incumbent-exclusion rule is not proentry, but instead seeks to select one form (price cutting) of entry over another (quality improving). Second, given the existing number of firms, the potential for sizeable competitive price effects is low. Third, the economic benefits of advanced wireless services are likely to be very high. Fourth, access to spectrum resources does not necessarily convey financial success, as spectrum is but one of many inputs necessary to provide service. In all, the Authors believe these facts, interpreted in the context of the theory, suggest incumbent exclusion rules are not welfare enhancing, at least in the United States

The Broadband Adoption Index: Improving Measurements and Comparisons of Broadband Deployment and Adoption

Countries around the world are increasingly concerned as to whether the adoption of broadband technology by their respective citizens is sufficient to support economic growth and social development. Unfortunately, such concerns are often expressed in terms of where a country ranks among its peers by means of raw adoption numbers. Such raw data are often misleading and incomplete. In this Article, we propose a different and more policy-relevant approach to adoption measurement. We develop a value-based Broadband Adoption Index (BAI) that compares the actual value to society that results from the adoption of broadband technology to a target level of adoption value. This target level will vary from country to country and is a function of the social value of broadband connectivity, measured as the difference in the social benefits and the costs of broadband. The BAI is specifically designed to accommodate and include the value of different connection modalities, like mobile broadband, into a single index-something that merely summing the number of connections cannot do. We believe that policymakers can adopt aspects of the BAI approach immediately, with particular attention to collecting and using proper information for policy decisions

The Broadband Adoption Index: Improving Measurements and Comparisons of Broadband Deployment and Adoption

Countries around the world are increasingly concerned as to whether the adoption of broadband technology by their respective citizens is sufficient to support economic growth and social development. Unfortunately, such concerns are often expressed in terms of where a country ranks among its peers by means of raw adoption numbers. Such raw data are often misleading and incomplete. In this Article, we propose a different and more policy-relevant approach to adoption measurement. We develop a value-based Broadband Adoption Index (BAI) that compares the actual value to society that results from the adoption of broadband technology to a target level of adoption value. This target level will vary from country to country and is a function of the social value of broadband connectivity, measured as the difference in the social benefits and the costs of broadband. The BAI is specifically designed to accommodate and include the value of different connection modalities, like mobile broadband, into a single index-something that merely summing the number of connections cannot do. We believe that policymakers can adopt aspects of the BAI approach immediately, with particular attention to collecting and using proper information for policy decisions