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Monopoly power and the problem of CLEC access charges

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  • Uri, Noel D.

Abstract

The analysis in this paper considers the problem of excessive originating and terminating access charges imposed by some competitive local exchange carriers (CLECs) in the United States. The problem arises because the current institutional structure provides an incentive for CLECs to charge for access service in excess of what a competitive market would indicate. An examination of the data shows that the problem of excessive access charges imposed by CLECs is very real. An analysis of terminating access charges for September 2000 reveals that average terminating access charges billed to three interexchange carriers (IXCs) are excessive, exceeding average price cap regulated incumbent local exchange carrier (ILEC) access charges by 370-470 percent. Some solutions to the problem are offered including a first-best solution whereby the calling party would be required to pay for originating access service and have the receiving party pay for terminating access service. A second-best solution would be to limit CLEC's access charges to an IXC to be less than or equal to the access charges of the ILEC with which it directly competes for customers.

Suggested Citation

  • Uri, Noel D., 2001. "Monopoly power and the problem of CLEC access charges," Telecommunications Policy, Elsevier, vol. 25(8-9), pages 611-623, September.
    • Handle: RePEc:eee:telpol:v:25:y:2001:i:8-9:p:611-623
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    Cited by:

    1. Noel Uri, 2004. "The Impact of Incentive Regulation on Service Quality in Telecommunications in the United States," Quality & Quantity: International Journal of Methodology, Springer, vol. 38(3), pages 291-318, June.
    2. Susan M. V. Flaherty & Paul R. Zimmerman, 2005. "Does Allowing the Bells to Offer InterLATA Long‐Distance Service Affect Entry into Local Telephony?," Southern Economic Journal, John Wiley & Sons, vol. 72(1), pages 197-212, July.
    3. Joan Calzada & Francesc Trillas, 2005. "The interconnection prices in telecomunications: from theory to practice," Hacienda Pública Española / Review of Public Economics, IEF, vol. 173(2), pages 85-125, June.
    4. Noel Uri, 2003. "Service Quality Effects of Incentive Regulation on Access Service in Telecommunications in the United States," European Journal of Law and Economics, Springer, vol. 16(3), pages 369-390, November.

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