Telephone Pricing to Promote Universal Service and Economic Freedom
OSP Working Paper 18 (Jan 1986) argues that competition and the divestiture have increased consumer freedom to choose various kinds of telephone services and thus have reduced the ability of telephone companies to price those services in an arbitrary way. Brock also argues that the interexchange carriers’ ability to bypass switched access services that provide a contribution to other telephone services, together with the increasing opportunities in shared tenant services, indicate that the current pricing system may not be sustainable.
Brock therefore explores the kind of pricing structure that would be sustainable under highly competitive conditions. He finds that price structures exist that will raise the necessary revenue under competitive conditions without creating any tendency to reduce the present degree of universal service.