A framework for considering local measured service

Bridger M. Mitchell

Expert InsightsPublished 1984

The author examines Local Measured Service (LMS) as a means of billing for telephone service. He considers three questions: (1) Is LMS more efficient than flat-rate pricing in improving the use of economic resources? (2) Is LMS fairer? That is, is it more equitable to charge people for actual telephone use than to charge a fixed subscription fee? (3) Does LMS increase telephone access, by increasing the number of subscribers if monthly bills are lowered, or preventing the loss of subscribers if the overall level of local rates rises? The author concludes that the net effect of instituting LMS in a particular region will require detailed study, but that the following general principle may apply: LMS will provide a net increase in efficiency if the total cost savings to the telephone company exceed, by a factor of 2, the extra costs of measuring and billing local calls.

Document Details

  • Copyright: RAND Corporation
  • Availability: Web Only
  • Year: 1984
  • Pages: 12
  • Document Number: P-6992

Citation

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Mitchell, Bridger M., A framework for considering local measured service. Santa Monica, CA: RAND Corporation, 1984. https://www.rand.org/pubs/papers/P6992.html.
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