Technological Advance and Market Structure in Domestic Telecommunications.

by Leland Johnson

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As new telecommunication developments (such as satellite relay of TV broadcasts) offer competition to established carriers, existing rates must not be frozen to protect uneconomic activities. "Cream skimming" could affect only 15 percent of Bell System activities. The boundary between the franchised monopoly and the competitive area might reasonably be drawn between switched (telephone) and unswitched systems, as proposed by the President's Task Force on Communications Policy. Competitors must be allowed to interconnect with telephone lines. Revamping of radio spectrum management practices for efficient use is increasingly needed. The vast difference in volume between international and domestic message traffic (millions compared with billions) may suffice to justify quite different market structures for them. (Delivered at the American Economics Association annual meeting, 1969.) 13 pp. Ref.

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