What Happens When Local Phone Service is Deregulated?

Posted by D. Daniel Sokol

Jeffrey A. Eisenach (Navigant Economics LLC, George Mason University School of Law) and Kevin W. Caves (Navigant Economics) ask What Happens When Local Phone Service is Deregulated?

ABSTRACT: After more than half a century of monopoly and public utility-type regulation of retail telephone rates, the United States embarked on a path of liberalization in the early 1980s. That process is now nearing completion. However, two areas of telephone service largely remain under traditional regulation: rural-area service and “basic” service. Some states, however, have moved toward deregulation in these areas as well. This paper examines the outcomes of those efforts as compared to states that maintain traditional regulation. It finds that in terms of rates and utilization, consumers in deregulated states are at least as well off as consumers in regulated states.