Taxation by Telecommunications Regulation

Abstract

Telecommunications has become an increasingly important area of attention by policymakers as new services such as cellular telephone and Internet services become increasingly important to businesses and consumers. Rapidly changing technology has led to these new services as well as the realization that market-based competition may replace much outdated regulation which has led to considerable consumer harm (e.g. Hausman, 1997). Congress passed the Telecommunications Act of 1996, the first major change in telecommunications legislation since 1934, in response to these changes. What role does the field of public finance have in the analysis of telecommunications policy? Telecommunications regulation in the U.S. is replete with a system of subsidies and taxes, in part because of the dual system of regulation in which the federal government (FCC [Federal Communications Commission]) and each state has regulatory jurisdiction over local telephone companies. Public-finance analysis demonstrates how to evaluate t...