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Universal service obligations and competition

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  • Chone, Philippe
  • Flochel, Laurent
  • Perrot, Anne

Abstract

We provide some elements to assess and compare various regulatory rules for the allocation and funding of universal service obligations (USOs). We restrict ourselves to ubiquity and spatial non discrimination constraints. We examine the welfare consequences of two systems: First, a regulation where USOs are imposed only on the incumbent firm (restricted-entry regulation) and second, a 'pay or play' rule where the entrant may serve non profitable users. Whereas pay or play regulation dominates when only the ubiquity constraint is at work, this result no longer holds when non discrimination is added. (C) 2000 Elsevier Science B.V. All rights reserved.We provide some elements to assess and compare various regulatory rules for the allocation and funding of universal service obligations (USOs). We restrict ourselves to ubiquity and spatial non discrimination constraints. We examine the welfare consequences of two systems: First, a regulation where USOs are imposed only on the incumbent firm (restricted-entry regulation) and second, a `pay or play' rule where the entrant may serve non profitable users. Whereas pay or play regulation dominates when only the ubiquity constraint is at work, this result no longer holds when non discrimination is added.
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Suggested Citation

  • Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2000. "Universal service obligations and competition," Information Economics and Policy, Elsevier, vol. 12(3), pages 249-259, September.
    • Handle: RePEc:eee:iepoli:v:12:y:2000:i:3:p:249-259
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    1. Philippe Choné & Laurent Flochel & Anne Perrot, 1999. "Allocating and Funding Universal Service Obligations in a Competitive Network Market," Working Papers 99-55, Center for Research in Economics and Statistics.
    2. Gasmi, F. & Laffont, J. J. & Sharkey, W. W., 2000. "Competition, universal service and telecommunications policy in developing countries," Information Economics and Policy, Elsevier, vol. 12(3), pages 221-248, September.
    3. Anton, James J & Vander Weide, James H & Vettas, Nikolaos, 1998. "Strategic Pricing and Entry under Universal Service and Cross-Market Price Constraints," CEPR Discussion Papers 1922, C.E.P.R. Discussion Papers.
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