Communications satellites and telephone rates : problems of government regulation

by Leland Johnson

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An examination of the telephone tollrate changes likely to follow the cost reductions made possible by the use of satellite communications systems. Only a tenuous relationship exists today between costs and rates for particular telephone services because of the nature of government regulatory practices, and because the telephone firm itself has an interest in pricing its services in a manner somewhat divorced from considerations of cost. Given the continuation of these practices, the study concludes that the effect of satellite communications on rates will be highly uncertain--an undesirable situation on both political and economic grounds. Suggestions are made about changes in regulation that would contribute toward a more desirable outcome.

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