Post on 25-Dec-2015
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University of ColoradoCentris
Temple University & CentrisCopyright © 2009 James Alleman. All Rights Reserved.
Universal Service: A New Definition?
James AllemanAniruddha Banerjee
Paul N. Rappoport
James Alleman University of Colorado
IssuesPolicy FrameworkAuctionsConclusions
Agenda
James Alleman University of Colorado
Need for Universal Service? Definition of USO?What Technology?
Issues
James Alleman University of Colorado
Need for Universal Service? Externalities?Broadband?Economic development?
Issues
James Alleman University of Colorado
Externalities?Not an issue in developing worldIssue is developing world
Economic DevelopmentNot proven -- neither BB or NB
Best allocation of resources?
Need for Universal Service?
James Alleman University of Colorado
Need for Universal Service? ...
Definition of USO?Narrow bandBroadbandVoice/data connectivityVideo connectivity
Issues
James Alleman University of Colorado
Definition of USO?
Narrow bandTraditionalEasier to implement
BroadbandCostly, fixedLess expensive, wirelessEconomic contribution?
James Alleman University of Colorado
Need for Universal Service? ...
Definition of USO?...
TechnologyFixed?Mobile?Wireless, all types?
Issues
James Alleman University of Colorado
Fixed?TraditionalWireless substitutes for
Mobile?Less costlyUbiquitous
Wireless, all types?
Technology
James Alleman University of Colorado
Mobiles/main lines
James Alleman University of Colorado
(partial list)
Nokia 3250Nokia 5500 Sport Nokia 5700Nokia 6110 NavigatorNokia N95Nokia N95 8GBNokia N96...
VoIP Compatible Phones
James Alleman University of Colorado
3G plus WiFi
TrueMove iPhone (announced in 16.01.2009)
3G plus WiFi
James Alleman University of Colorado
IssuesPolicy Framework
Agenda
James Alleman University of Colorado
Agenda
Policy FrameworkGoal: Universal Service
Efficiency ConcernsCross-Subsidies
InstrumentFinancing/Funding
James Alleman University of Colorado
Policy Framework
Universal Service Obligation:Network Connectivity/Service
James Alleman University of Colorado
Economic EfficiencyDistributional Impact/EquityExternalities Addressed?
High market penetration of exchange service in DC's
High mobile penetration in LDC's
Policy Framework: Concerns
James Alleman University of Colorado
Not Addressed Incidence Penetration Needs/Means Test
What are the Social Goals?
Policy Framework
James Alleman University of Colorado
DemandPatterns
User Subsidy
ServiceSubsidy
Incidence
James Alleman University of Colorado
Universal Service Obligation
Cross-subsidies: Inefficient Not marginal subscribers Not targeted If targeted
°Externality addressed°Comports with efficient pricing: High access charge & usage charge Closer to Marginal Cost
James Alleman University of Colorado
Q Q '
Price
Quantity
AC, MCP '
P A B
Service Subsidy
James Alleman University of Colorado
Universal Service Obligation
InefficientNot marginal subscribersNot targetedNot desired
Demand relationships
James Alleman University of Colorado
Demand Relationships
Subscriber Access: Derived Demand
Exchange usageToll usageMobile usageOther services
James Alleman University of Colorado
Demand Relationships
Access Is Derived DemandDemand Cross-elasticities
Access demand has a cross- elasticity with toll demand
Mobile demand has a cross- elasticity with traditional service
James Alleman University of Colorado
Economic EfficiencyDistributional Impact/EquityExternalities Addressed?
High market penetration of exchange service in
DC's
Policy Goals: Concerns
James Alleman University of Colorado
Efficiency Concerns
InefficientNot marginal subscribersNot targetedNot desiredDemand relationships
Companies Subsidized
James Alleman University of Colorado
No Market TestInefficientInhibits CompetitionExpensivePreemptive
Cross-Subsidies
James Alleman University of Colorado
Q Q '
A B
Price
Quantity
AC, MCP 'P
Efficient Entrant's MC
Preemptive
James Alleman University of Colorado
PriceAC, MC
P 'P
Efficient Entrant's MC
Efficient entrant excluded from the market
Preemptive
James Alleman University of Colorado
Recommendations
Subsidies
No Cross-SubsidesTargeted Subsidies, if anyGovernment Financed
James Alleman University of Colorado
IssuesPolicy FrameworkAuctions
Agenda
James Alleman University of Colorado
Auctions
Auctions:Assign ValueMinimize PaymentsVoluntary ActionsDiscipline RegulatorEfficient Entry & Investment
James Alleman University of Colorado
Assign Value
Market MechanismNot Cost-of-service BasedEliminates Cost Debates
James Alleman University of Colorado
Minimize Payments
Market DeterminedSelf-determined market structure Replaces exclusive franchise
James Alleman University of Colorado
Auctions
Assign ValueMinimize PaymentsVoluntary ActionsDiscipline Regulator
James Alleman University of Colorado
Discipline Regulator
No Regulatory GamingNo Regulatory Determination:
Who is subsidized or The size of the subsidy
James Alleman University of Colorado
Auctions
Assign ValueMinimize PaymentsVoluntary ActionsDiscipline RegulatorEfficient Entry & Investment
James Alleman University of Colorado
Auctions
Assign ValueMinimize PaymentsVoluntary ActionsDiscipline RegulatorEfficient Entry & Investment
James Alleman University of Colorado
IssuesPolicy FrameworkAuctionsConclusions
Agenda
James Alleman University of Colorado
Conclusions
Define USO ObjectivesService Neutral Fund via Government Auctions Fulfill Policy Goals
Technological/service neutralCost minimizingNo regulatory gaming
James Alleman University of Colorado
Contact Information
Dr. James Alleman2491 Twenty-third StreetBoulder, CO 80304-3707
phone: +1 303 443-4465mobile: +1 917 294-1688e-mail: James.Alleman@Colorado.eduhttp://www.colorado.edu/engineering/alleman/
University of ColoradoCentris
Temple University & CentrisCopyright © 2009 James Alleman. All Rights Reserved.
Universal Service: A New Definition?
James AllemanAniruddha Banerjee
Paul N. Rappoport