The role of service quality and capital technology in telecommunication regulation

J. R. Norsworthy, HweiAn Tsai*

*Corresponding author for this work

Research output: Contribution to journalArticle

9 Scopus citations

Abstract

Successful incentive regulation of telecommunications depends upon price indices that reflect the changes in composition and performance of several key aggregates: aggregates of the telephone services produced by the telephone companies, aggregates of services consumed by particular customer groups and by customers as a whole, and the aggregate of capital goods that comprise the stock of capital used in production. In this paper, we formulate measures of demand for telephone services that can be realized empirically from data routinely reported to the US FCC to incorporate variations in service quality, changes in the mix or composition of services demanded by customers of the telcos, and quite rapid changes in the performances of capital goods. We show how the service quality measures, the switching technology measures, and the capital productivity improvements modify the productivity measures as well as the service demand measures, and how the resulting social optima differ in the RA (regulatory authority) regulatory scheme.

Original languageEnglish
Pages (from-to)127-145
Number of pages19
JournalInformation Economics and Policy
Volume11
Issue number2
DOIs
StatePublished - 1 Jul 1999

Keywords

  • Capital technology
  • Price cap index
  • Service quality
  • Telecommunications regulation

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