Date Issued: 
April 1, 1980

Nina Cornell, Daniel Kelley, and Peter Greenhalgh.  

OSP Working Paper 1 (Apr 1980) argues not only that increased competition in the common carrier communications industry is compatible with the achievement of social goals but, also, that many of the goals may be unattainable without competitive forces.  The authors reject the view that, because telephones are not like airplanes, the principles of competition that were successfully applied to the airline industry will not work in telecommunications markets.

The authors argue that, unless those competitive deregulatory principles are applied, the dominant telephone utilities will share the fate of the railroads.  That is, rate regulations and controls on entry and exit are not likely to be any more successful at serving social goals in common carrier communications than they have been at serving basic transportation goals. The authors therefore conclude that following the airline deregulation example may be the only way to ensure that basic telecommunications goals continue to be served.