Abstract

In October 2003, the Phoenix Center released its POLICY BULLETIN NO. 7 entitled The Positive Effects of Competition on Employment in the Telecommunications Industry. This Bulletin included an analysis of employment trends in the telecommunications industry before and after the 1996 Telecommunications Act. A number of figures and statistical tests revealed that employment in the wireline telecommunications sector grew substantially, and almost immediately, after the 1996 Act. BellSouth hired Robert W. Crandall and Hal J. Singer (Criterion Economics) to respond to POLICY BULLETIN NO. 7 in their paper An Accurate Scorecard of the Telecommunications Act of 1996: Rejoinder to the Phoenix Center Study No. 7 (January 2004) (hereinafter the Rejoinder). The authors claim that the analysis presented in Figure 1 of Policy Bulletin No. 7 was flawed (at 1). Although the majority of the Rejoinder does not go to the merits of Policy Bulletin No. 7, but is instead a polemic against the Federal Communications Commission's unbundling policies of the last eight years, in an effort to ensure the accuracy and legitimacy of all analysis performed and released by the Phoenix Center, we have evaluated carefully the Rejoinder to see if the document contains any legitimate criticisms or offers any material improvements to the analysis in Policy Bulletin No. 7. After review, we find that by incorporating the Rejoinder's plausibly legitimate suggestions into our empirical analysis in a theoretically appropriate manner does not materially alter the estimated employment effects summarized in Policy Bulletin No. 7. We also find that the methods used in Policy Bulletin No. 7 are preferred, in a statistical sense, to those proposed in the Rejoinder. Second, we were somewhat surprised the number of factual inaccuracies and logical inconsistencies in the Rejoinder, and some of these are listed in Section III. Finally in Section IV, although completely unrelated to anything contained in Policy Bulletin No. 7, we discuss Crandall's and Singer's contention that a UNE-Loop entry strategy is a non sustainable business plan (at 13). We do so because based on the arguments in the Rejoinder related to investment and cash flow, Crandall's and Singer's analysis appears to call for policies aimed at increasing the availability of UNE-P while reducing the opportunities for UNE-L and facilities-based entry (the latter, according to Crandall and Singer, includes only entry that replicates the local loop in some way).

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