Long-distance Telephone Service Research Articles

North America

On 19 September 1985, Mexico City was devastated by an earthquake measuring 8.1 on the Richter scale that claimed more than 10,000 lives. I had arrived in the capital two days earlier with my family to begin work as Latin America correspondent for The Globe and Mail. Instead of the day of logistics and paperwork I had planned, I set out in search of stories among the rubble-strewn streets of a city I barely knew. There was no shortage of heartrending tales of death and survival, but sending them back to Canada was another thing altogether. The quake had toppled Mexico's main telecommunications tower, knocking out international long-distance telephone service and all but severing communications with the world's largest metropolis.One television station, tiny Channel 13, stayed on the air. Its transmissions were picked up through a satellite link by a radio station in Bogota, Colombia, and information was relayed by news agencies there to the rest of the world. Some US newspapers used ham radio operators for coverage in editions of 19 and 20 September. A few foreign reporters based in Mexico City got stories out the first day. Some headed straight for the airport and caught planes before it closed. At least two managed to locate a working telex machine; others drove some distance outside the city to find functioning telephones. I, like many, did not succeed, and in my subsequent years as a foreign correspondent I never forgot the earthquake's lesson: the best story in the world is useless unless it can be transmitted.1Another major earthquake is likely to strike Mexico City at some point. But fortunately for citizens and disaster relief officials, and incidentally for journalists, the prospect of a major urban area being cut off from communication for more than an hour or two is now close to zero. Conventional long-distance telephone service has been augmented in several ways. Cell phone networks, nonexistent in 1985, are decentralized. Today a journalist carrying the right equipment can send a story and pictures home from almost anywhere on earth via satellite phone-and, as the Bogota link demonstrated, satellite phones bypass earthquakes. Private and public wireless data networks and the internet provide further layers of redundancy. In just two decades, in Mexico as elsewhere, both the form and content of international communication have been transformed.Yet while we marvel at what is possible, we risk losing sight of what may be slipping away. The communications revolution is an operational blessing for traditional news media, but it also poses a serious strategic challenge that many have failed to meet. Fast-paced, systematic coverage of global affairs became easier than ever, yet the number of news organizations maintaining a serious commitment to it dwindled. The production of text and images expanded immensely with the rise of the internet, but relatively little of the additional content was generated using the rigorous observation and verification characteristic of good journalism. Whether it has deepened knowledge and understanding among the peoples of the world is open to serious question.It is probably safe to say that none of the original promoters of the North American free trade agreement (NAFTA) foresaw the impact of the internet or wireless technology. If they had, these marvels would doubtless have been incorporated into the rosy visions of continental harmony and self-awareness evoked in NAFTA's defence. They have indeed helped change the landscape and methods of politics. But it is uncertain whether the people of Canada, Mexico, and the United States are on the whole better informed than they were two decades ago about the continent they live in-that is to say, about themselves and one another. The internet has allowed a broader range of voices to be heard in all three countries, to varying degrees, but serious concerns continue to be raised in each of them about the dominance of a few private media interests. …

Long Lines: AT&T's Long-Distance Network as an Organizational and Political Strategy

The primary importance of long-distance telephone service to the American Telephone and Telegraph Company in the first two decades of the twentieth century was not commercial but organizational and political. The so-called Bell System was not a single firm before 1910 but was, rather, an association of regional companies with considerable autonomy. As AT&T's leaders worked both to overcome independent competitors and to curtail the autonomy of their own local affiliates, long-distance service offered them a powerful technological justification for the consolidation of control. Outside the Bell System, long distance also served as a vivid symbol of interconnection and integration. Long distance proved central to AT&T's campaign to convince Americans of its own legitimacy and that of nation-spanning corporations in general.

Regulating prices for shifting between service providers

The price that a regulated access provider charges for shifting customers between service providers has significant welfare implications. Typical regulatory approaches to pricing, such as pricing based on fully allocated cost or incremental cost, ignore the characteristics of consumer demand. A theoretical alternative, Ramsey pricing, considers only the elasticity of demand for given products. This paper directs attention to the competitive process. Using US long-distance telephone services as an example, this paper shows how empirical evidence concerning customer acquisition costs, customer switching costs, and churn among service providers can help to inform price regulation.

Regulating prices for shifting between service providers

The price that a regulated access provider charges for shifting customers between service providers has significant welfare implications. Typical regulatory approaches to pricing, such as pricing based on fully allocated cost or incremental cost, ignore the characteristics of consumer demand. A theoretical alternative, Ramsey pricing, considers only the elasticity of demand for given products. This paper directs attention to the competitive process. Using US long-distance telephone services as an example, this paper shows how empirical evidence concerning customer acquisition costs, customer switching costs, and churn among service providers can help to inform price regulation.

Incentives for Discrimination when Upstream Monopolists Participate in Downstream Markets

A regulated upstream monopolist supplies an essential input to firms in a downstream market. If an upstream monopolist vertically integrates downstream, non-price discrimination becomes a concern. Discrimination always arises in equilibrium when the vertically integrated provider (VIP) is no less efficient than its rivals in the downstream market, but it does not always arise when the VIP is less efficient than its rivals. Numerical simulations that parameterize the regulator's ability to monitor discrimination in the case of long-distance telephone service in the U.S. reveal that pronounced efficiency differentials are required for the incentive to discriminate not to arise in equilibrium.

Targeting international consumers in the long-distance telephone services market

A segment of heavy users in the international long-distance telephone services market was studied to understand the importance of carrier selection criteria. International students attending a US university rate relative price, reliability of lines and complaint handling as the three most important factors when selecting a long-distance carrier. The relative importance of criteria varies, however, by past switching behaviour and by current carrier. Switchers, unlike non-switchers and AT&T customers, rate switching incentives and economic rate scheduling as more important than reliability of lines and complaint handling in the carrier selection process. The profiles of switchers and non-switchers are significantly different as well. Implications for appropriate customer attraction and retention strategies to be used by long-distance carriers targeting these switching behaviour segments are discussed with respect to relationship, database, and Internet marketing tactics.

Designing Incentive Regulation for the Telecommunications Industry

Incentive regulation has become widespread in telecommunications. By assessing the strengths and weaknesses of plans that are currently in place, this study uncovers the central principles that underlie sound and effective incentive regulation. Under conditions of rapid change and great uncertainty, incentive regulation, which encourages a company toward goals but allows it some discretion in reaching those goals, should work better than rate of return regulation, which estimates a company's costs and then limits the amount of return the firm can earn. Given the uncertainty that exists in telecommunications today about consumer demand and the nature of production technology, it is no surprise that regulatory commissions have recently implemented a variety of incentive regulations. Sappington and Weisman review the current conditions of the telecommunications industry and explore the merits of providing regulated firms with options in incentive regulation plans. They describe the difficulties regulators face in dealing with incomplete information about companies' activities, in establishing credibility, and in avoiding the dangers of asymmteric regulation (where regulation imposed on new entrants differs from rules for established companies). They close by analyzing competition in long-distance telephone services as it pertains to incentive regulation and by reviewing recent empirial studies.

Regulating Prices for Shifting Between Service Providers

The price that a regulated access provider charges for shifting customers between service providers has significant welfare implications. Typical regulatory approaches to pricing, such as pricing based on fully allocated cost or incremental cost, ignore the characteristics of consumer demand. A theoretical alternative, Ramsey pricing, considers only the elasticity of demand for given products. This paper directs attention to the competitive process. Using U.S. long-distance telephone services as an example, this paper shows how empirical evidence concerning customer acquisition costs, customer switching costs, and churn among service providers can help to inform price regulation. Attention to such factors highlights for regulators trade-offs involved in promoting different forms and dimensions of competition.

The Failure of Antitrust and Regulation to Establish Competition in Long-Distance Services

This text argues that governmental antitrust actions and regulatory activities have failed to bring true competition to long-distance telephone services in the USA, to the detriment of consumers seeking prices in line with the costs of providing those services. Although other long-distance telephone companies have emerged since the 1984 antitrust decree forced the monopoly AT&T to divide into smaller independent companies, the author shows how the three major long-distance telephone companies - AT&T, MCI and Sprint - have used the regulatory system to tacitly collude in setting prices and to bar entry into the market of potentially competitive alternative sources of services. The consequence, he claims, is an excessive cost to long-distance telephone customers conservatively estimated in the tens of millions of dollars.

Broadband Data Services over Residenial Access Networks

ese are truly exciting times for residential and business customers served by local telephone, cable television, and direct satellite providers. Perhaps for the first time, we are witnessing the application of computer networking techniques to telecommunication access network architectures. These local access options include fiber in the loop, fiber to the home, hybrid fibericoax, switched digital video, direct broadcast satellite, wireless microwave/RF links, broadband PCS, and so on. All these state-of-the-art access alternatives are being equipped with an overlaid TCP/IP data services delivery architecture to support high-speed interactive data services to the subscriber’s premises. Transmission rates from a few hundred kilobits per second to tens of megabits per second are envisioned using various digital subscriber line (xDSL over twisted pair) and RF subcarrier multiplexing (cable modems over coax) technologies. The ultimate objective is to equip the end user with high-speed access to the Internet, corporate intranets, and popular on-line services. This is with the grand intention of finally solving the last-mile bandwidth bottleneck and facilitating the deployment of advanced multimedia services such as work at home, distance learning, telemedicine, home shopping, electronic commerce, and high-speed Web access. This special issue is dedicated to provide up-to-date information on research topics, research results, and performance and economic comparisons of various access methods and architectures currently being considered for interactive broadband services (IBS) over residential access networks. The 1996 Telecommunications Deregulation Act allows both local and long-distance telephone service providers and television service providers to offer IBS to the home. Under this intense competition, the winning IBS providers would be those who can either use as much existing infrastructure as possible or cost-effectively and rapidly deploy access, transport, service, and management infrastructures. Research, investigations, standardization efforts, and field trials on all aspects of IBS to the home are progressing at full swing. We received more than 20 articles for publication in this special issue, but could accommodate only seven here. The reviewers selected the ones which fit

Price and Quality Strategies for Services:

Developing effective price and service quality strategies requires an understanding of the effect of price and service quality on buyers' attitudes, intentions and purchase decisions. Consumer Involvement is an important variable that may interact with price and service quality, and is the focus of this research. This paper examines the influence of involvement, price and service quality on attitudes and intention to purchase automobile insurance and long-distance telephone services.

Telecommunications infrastructure competition: The costs of delay

Abstract This paper examines the experience of the USA, the UK and other OECD countries that introduced infrastructure competition, principally for long-distance telephone service, during the 1980s. The results show that competition has generally brought lower prices, greater variety of service, faster innovation, higher usage and productivity gains, and increased output both in telecommunications and in other sectors of the economy. The evidence is now convincing that the economic benefits from competition outweigh the highly visible costs and disruptions to established organizations and relations. Other countries can learn from the pioneers' experience to reduce the uncertainties and costs resulting from the transition to competition.

Competition in Long-Distance Telephony: A Critical Analysis of Telecom Decision CRTC 92-12

In 1992 the agency responsible for regulating Canadian telecommunications, the CRTC (Canadian Radio-television and Telecommunications Commission), authorized Unitel Communications Inc. to provide a public long-distance telephone service. For the first time Bell Canada, and six of the other telephone companies that comprise the Stentor common carrier consortium, would face competition in the market for public telephony (CRTC, 1992a). This article is critical of the CRTC decision. It analyzes the content and to a lesser extent the process that led to the CRTC decision in order to demonstrate: (1) that in order to justify its decision the Commission was obliged to ignore the initial objectives it had set for the proceedings; (2) that the ultimate ruling was based on a bogus problematic which by definition the monopoly common carriers could not respond to; (3) that the decision to liberalize was based on a selective and inconsistent use of economic theory; and (4) the decision was not grounded in a rational consideration of the evidence presented before the Commission, but rather it was the culmination of a piecemeal shift in policy in favour of competition that had begun in the early 1980s.

Competition and regulation: The swing of the pendulum

This paper discusses the connection between macro-economic conditions and movements to regulate or deregulate certain industries. High demand, technological change and inflation induce deregulation while low demand and financial distress induce regulation. Airlines and long-distance telephone services are discussed in this context with some implications for electric utilities.

The Impact of Alternative Forms of State Regulation of AT&T on Direct-Dial, Long-Distance Telephone Rates

Federal and state regulatory agencies have traditionally used rate-of-return regulation to set profit and rate levels for utilities. A price cap framework, in which the regulatory agency sets a maximum rate below which the regulated utility has pricing flexibility, is possibly a more efficient alternative to rate-of-return regulation. This article presents an econometric analysis that compares AT&T's prices of intrastate, long-distance telephone service in states that allow AT&T pricing flexibility with those in states that do not. The results of this analysis suggest that AT&T's daytime, evening, nighttime, and weekend rates are significantly lower in states that allow pricing flexibility than in states that use rate-of-return regulation.

Economics and Politics of Deregulation: The Issue of Telephone Access Charges

The Access Charge Plan, a marginal-cost pricing system for long-distance telephone service, was devised by the Federal Communications Commission in 1982 to facilitate the transition from regulated monopoly to competition. In little more than a year after the plan was proposed, as the plan's distributive and competitive impacts were recognized by a host of stakeholders and political interests, a flood of opposition Abstract swamped the initiative. What emerged, although distinctly different from the system that had previously existed, nevertheless continued to reflect some of the objectives of the past regime, including subsidies to residential users and some shelter for AT&T's principal competitors. The strength of the political process that produced these modifications was due in part to elements in the original FCC proposal that were not essential to its central purpose.

Development of transcontinental communications in Canada

THERE are three major communication agencies in Canada. The Trans-Canada Telephone System furnishes long-distance telephone service to the public across Canada and also provides privately leased telephone and telegraph circuits. The Canadian Pacific Railway Company and the Canadian National Railways each furnish commercial telegraph service throughout Canada, and they also provide a number of privately leased circuits, both telephone and telegraph.

News and Views

THE radio-telephone service between London and New York was openedsuccessfully to public use on Jan. 7. Those who took part in the conversations for the first time were most favourably impressed by the clearness of the articulation, the voices of the speakers being at once recognisable. After sunset on Jan. 7 on the eastern side of the Atlantic the atmospheric conditions became very bad, which is quite an unusual occurrence for this time of the year. Yet still nearly all the subscribers who had booked times in advance were able to hold conversations. In six minutes the Times exchanged more than 600 words with its correspondent in New York, there being only one or two pauses for repetition. Sixtyeight years ago, Queen Victoria sent a message to President Buchanan at the rate of one word a minute, and eighteen years later Graham Bell talked to the future Lord Kelvin by telephone over the length of a room. Kelvin was filled with wonder, and pictured many developments which have come to pass. But even he never imagined that easily recognisable tones could be transmitted through 3000 miles of empty air without wires or cables almost as quickly as light. First we send signals, next we speak, and in the future we doubtless shall be able to see over thousands of miles. At present this long-distance telephone service is limited to telephone users in the neighbourhood of London and New York, but we look forward to this restriction being removed shortly, as telephone communication is now possible with towns on the Pacific Ocean. We do not think that differences in local times will have much effect on the traffic in long-distance communication.