Universal service and the Telecommunications Act of 1996: The fact after the act

Telecommunications Policy

Volumn 22, Issue 1, 1998, Pages 57-71

  Prieger, James ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COMPETITION; LAWS AND LEGISLATION; PUBLIC POLICY; TAXATION; TELECOMMUNICATION CONTROL;

UNIVERSAL SERVICE POLICY;

TELECOMMUNICATION SERVICES;

EID: 0031998788     PISSN: 03085961     EISSN: None     Source Type: Journal    
DOI: 10.1016/S0308-5961(97)00057-8     Document Type: Article

References (49)

1. Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, to be codified at 47 US Code; §§ 151 et. seq. (hereafter references will be to USC sections).
2. 47 USC §§ 257(b), 261 (c), 271 (h), 254(b)(5), 254(e), 256(b)(1); FCC Telecommunications Act of 1996 Enacts 21 Proposals to 'Reinvent' Agency News Release (8 February 1996); and US Senate Conference Report 104-230, 104th Cong., 2d sess. and p 131 (1996).
3. 47 USC §§ 257(b), 261 (c), 271 (h), 254(b)(5), 254(e), 256(b)(1); FCC Telecommunications Act of 1996 Enacts 21 Proposals to 'Reinvent' Agency News Release (8 February 1996); and US Senate Conference Report 104-230, 104th Cong., 2d sess. and p 131 (1996).
4. 47 USC §§ 257(b), 261 (c), 271 (h), 254(b)(5), 254(e), 256(b)(1); FCC Telecommunications Act of 1996 Enacts 21 Proposals to 'Reinvent' Agency News Release (8 February 1996); and US Senate Conference Report 104-230, 104th Cong., 2d sess. and p 131 (1996).
5. 47 USC § 254(b).
6. FCC Notice of Proposed Rulemaking and Order Establishing Joint Board FCC 96-93 (8 March 1996).
7. S Conf Rep 131, 47 USC § 254(a)(1).
8. FCC Recommended Decision FCC 96J-3 (8 November 1996).
9. FCC Report and Order FCC 97-157 (8 May 1997).
10. S Conf Rep 1.
11. 47 USC § 36.601 et seq.
12. Id. § 36.125(b).
13. Id. §§ 69.105, 69.502, 69.603(e), 69.612.
14. Rural Electrification Act of 1936, 7 USC §§ 922, 935(a).
15. AT&T Corp. Comments of AT&T Corp., 3-4, 16, and Further Comments at 2-4, App. A; BellSouth Corp. and BellSouth Telecommunications, Inc. Comments, 8; all for FCC CC Dkt. 96-45.
16. AT&T Corp. Comments of AT&T Corp., 3-4, 16, and Further Comments at 2-4, App. A; BellSouth Corp. and BellSouth Telecommunications, Inc. Comments, 8; all for FCC CC Dkt. 96-45.
17. AT&T Corp. Comments of AT&T Corp., 3-4, 16, and Further Comments at 2-4, App. A; BellSouth Corp. and BellSouth Telecommunications, Inc. Comments, 8; all for FCC CC Dkt. 96-45.
18. FCC Recommended Decision ¶¶ 272, 283, 289, 776.
19. Id. ¶¶ 46-52, 65-67.
20. The proxy model is still evolving and has spawned its own proceeding. Two main models are the Benchmark Costing Model (BCM2), submitted by Sprint and U S West, and the Hatfield Model, submitted by MCI and AT&T.
21. FCC Recommended Decision ¶¶ 341-349.
22. The SLC is a monthly charge levied by the FCC for subscriber line cost recovery that appears on every phone bill for local service. Currently the SLC is $3.50 for residential subscribers and single-line businesses and $6 for multi-line businesses.
23. 47 USC § 254(b)(3).
24. FCC Report and Order CC Docket No. 96-61 (7 August 1996).
25. Garbacz C and Thompson H. Assessing the impact of FCC Lifeline and Link-Up programs on telephone penetration. Journal of Regulatory Economics, 1997, 11, 67-78.
26. Hundt, R., 'Competition is the Key' speech to Deloitte & Touche Consulting Group, Telecompetition '95, Washington, DC (5 December 1995).
27. Federal-State Joint Board Staff in CC Dkt. No. 80-286 Monitoring Report May 1996 CC Dkt 87-339, table 2.5.
28. FCC Recommended Decision ¶¶ 379-394.
29. 47 USC § 254(b)(6), (h)(1).
30. Benton Foundation Further Comments on Universal Service DA 96-10783 (1996).
31. McKinsey and Company Connecting K-12 Schools to the Information Super-highway McKinsey, 1995.
32. The Act requires that to be eligible for universal service support funds, a telecommunications company must provide the complete range of supported services (47 USC § 214(e)(1)). It would be impossible for many companies that install wiring to offer the other supported telecommuncations services.
33. FCC Recommended Decision ¶¶ 473-484.
34. FCC Notice Of Proposed Rulemaking, Third Report And Order, And Notice Of Inquiry FCC, 24 December 1996, ¶ 247
35. FCC Report and Order FCC 97-157, ¶ 267.
36. FCC Recommended Decision ¶ 425.
37. McKinsey and Company, Connecting K-12 Schools to the Information Super-highway McKinsey, 1995, p 57.
38. Airtouch Communications, Comments On Universal Service Recommended Decision Airtouch Communications, 1996.
39. FCC Report and Order, FCC 97-157, 1997, ¶¶ 39-41.
40. MacAvoy P. Tacit collusion under regulation in the pricing of interstate long-distance telephone services. Journal of Economics & Management Strategy, 1995, 42, 147-185.
41. The analysis assumes firms pass 100% of the tax through to consumers. This is consistent with the evidence concerning pass-through by AT&T of reductions in access charges (FCC Order FCC 95-427, 23 October 1995, pp 56, 79).
42. Auerbach, A The Theory of Excess Burden and Optimal Taxation' Handbook of Public Economics, Vol. I. ed. Auerbach, A and Feldstein, M. Elsevier Science Publishers BV (North-Holland), Amsterdam, 1985, pp 68-70.
43. I assume that the LECs will not be allowed to pass any of their tax through to local service rates. State commissions typically keep local service rates as low as possible.
44. Service revenue data for IXCs was adjusted to account for the fact that network access charges paid by IXCs to LECs will change under the NUSF plan for two reasons. First, the FCC plans to remove the implicit universal service contribution component of access charges once the NUSF is in place. Second, LECs will be allowed to recover part of their contributions to the NUSF through new access charge rate elements. These two changes work to offset each other.
45. Taylor W, Zona J. An analysis of the state of competition in long-distance telephone markets. Journal of Regulatory Economics, 1997, 11, 227-255.
46. Ramsey F. A contribution to the theory of taxation. Economic Journal, 1927, 37, 47-61.
47. Compare this result with the rebalancing exercise performed by Crandall, R and Waverman, L, Talk is Cheap, Brookings Institution, Washington DC, 1995, pp 93-94. By rebalancing the rates of residential and business access and toll calling, they find that the price of local access should double and that the welfare gain is about $8 billion per year.
48. Calculations require an estimate of new service revenues if Lerner index were to fall to zero. See Appendix A.
49. Office of the Press Secretary, The White House Remarks by the President and the Vice President to the People Of Knoxville, 10 October 1996.