Toward Competition in Local Telephony.

• Author: Ford, George S.

Despite its brevity, this book covers many relevant topics associated with the move toward a more competitive environment in local exchange telecommunications markets. The authors are capable and respected experts on the law and economics of local exchange telecommunications policy. While there are many other books and articles covering these topics in a more thorough manner, the consensus style of this book is indeed a contribution to the policy debate, and will aid those less familiar with the regulation of telecommunications common carriers decipher many of the pertinent regulatory and technological characteristics of the industry. The manner in which the topics are covered is accessible to most readers. Unfortunately, the size of the book does not permit a complete analysis of the topics covered, but full exposition of a single regulatory issue in common carrier regulation would fill many books of this size.

The purpose of the book, as stated by the authors, is to describe in nontechnical terms the theoretical basis for reforms that regulators have undertaken, or are soon to undertake, in markets characterized by economies of scale and scope. Specifically, the book attempts to specify those regulatory policies and institutions of the day that need be modified or abolished in order to expedite the move toward competition in local exchange telecommunications markets. The central theme of the book is no surprise - the combination of well designed regulations and an open entry policy will advance competition in local exchange telecommunications markets. In short, pare down regulation and let the market sort out the winners and the losers. The authors do not, however, blindly assert that competition will, or can, evolve in every market or submarket.

The second chapter of the book contains a brief overview of the current status and prospective sources of competition in local exchange telecommunications markets including wireless services, cable telephony, and competitive access providers. The next four chapters provide a discussion of the basic principles of regulation at both a general level and specifically relating to local exchange telecommunications markets such as price floors and ceilings, Ramsey prices, predatory pricing, cross-subsidization, economies of scale and scope, and price-cap regulation. Those unfamiliar with the economic ideas and terminology employed in local exchange telecommunications regulation will find these short...