Empirical tests of the cross-subsidy and discriminatory-access hypotheses in vertically integrated telephony

Article Abstract:

The result of the antitrust case against AT&T which barred the regional Bell operating companies operating as integrated providers in adjacent markets is truly exceptional. The decision was based on monopolization theories which claim that vertical integration would facilitate cross-subsidization and that it would provide incentives allowing for anti-competitive discrimination favorable to its own service. An examination of the performance of a vertically integrated, multiple local exchange carrier present empirical evidence which do not support the theory.

Telecom Service Authorization

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Vertical integration and regulation in the telephone industry

Article Abstract:

Technological changes since the Modification of Final Judgment took effect in 1984 have altered the nature of telecommunications network. These have eliminated the distinction between the local exchange and interexchange services. Because of this, vertical integration results in a more efficient competition in the telephone industry. It would therefore greatly benefit the consumers if the line-of-business restrictions were to be lifted.

Vertical integration

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Costs of delay and rent-seeking under the Modification of Final Judgment

Article Abstract:

The process of requesting waivers from the Modification of Final Judgment (MFJ) line-of-business restrictions has become protracted and take months, sometimes even years. From 1984 to 1990 pending requests for waivers grew steadily, while those acted on by the Department of Justice declined from 1986 on. Evaluation shows that the cost of delays in the waiver process is much larger than its benefits in terms of consumer welfare.

Finance, Judicial process, Waiver (Civil procedure)

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