BPEA | 1997: Microeconomics

Valuing the Effect of Regulation on New Services in Telecommunications

Jerry A. Hausman
Jerry A. Hausman Massachusetts Institute of Technology

Microeconomics 1997

THIS PAPERD EALSw ith how to value the introduction of new services
in telecommunications. Much public discussion has centered on the
evolving “information superhighway” as well as on the many new
services that may be offered as high-capacity fiber optic transmission
networks are extended into the telecommunications infrastructure. The
Federal Communications Commission (FCC) has decided to tax longdistance
users to subsidize Internet access to schools and libraries. The
cost is estimated to exceed $2 billion a year. Numerous cable companies,
such as Time Warner, have announced plans to upgrade their
current coaxial-based networks to combined fiber-coax networks. This
increased transmission capacity will allow many more channels of
entertainment, high-speed access to information, and new interactive