Deregulating Telecommunications

In 1984, the Department of Justice settled its antitrust caseagainst AT&T. The agreement, embedded in the Modification ofFinal Judgment, led to a divestiture of the local telephoneexchanges from AT&T to the Regional Bell Operating Companies(known as the Baby Bells ). This agreement gave unprecedented powerover a major US industry to one man, Judge Harold Greene of the USDistrict Court of the District of Columbia. The Baby Bells couldnot enter any line of business without approval from Judge Greene.With technological change it became increasingly desirable for theBaby Bells to enter different lines of business, but each attemptwas subject to legal challenge and lengthy, costly litigation. In1994, the Baby Bells mounted a major legal challenge to theModification of Final Judgement (MFJ). As part of their strategy,they asked leading scholars in the field to examine the costs andbenefits of the MFJ and provide evidence in the form of affidavitsregarding its effect. Using a cost-benefit framework, theconclusion of the analysis is that the MFJ should be vacated andcompetition should be allowed in the industry. DeregulatingTelecommunications draws together a group of leading practitionersand academics in the fields of regulation, industrial organisationand antitrust to explore:

• A cost-benefit analysis of the 1984 AT&T antitrust settlement
• Theoretical and empirical studies that analyse the results of thesettlement from its inception in 1984 to 1994
• An explanation for the recent policy decisions to reduce theamount of regulation in telecommunications
• Analysis vital to predicting the results of any deregulation intelecommunications in the future

This book will prove invaluable to economists interested intelecommunications, as well as those interested in antitrust and in regulation.

Partial table of contents:

THE BASIS FOR THE MFJ, 1984 AND 1994.

The MFJ: An Imperfect Solution (P. Temin).

The Competitive Effects of Line-of-Business Restrictions inTelecommunications (K. Arrow, et al.).

BENEFITS OF REMOVING THE MFJ LINE OF BUSINESS RESTRICTIONS.

Vertical Integration and Regulation in the Telephone Industry (A.Alchian).

The Benefits of Releasing the Bell Companies from the InterexchangeRestrictions (P. Brandon & R. Schmalensee).

Realignment in Telecommunications (M. Maloney & R.McCormick).

THE POTENTIAL COSTS OF REMOVING THE LINE-OF-BUSINESSRESTRICTIONS.

Deterring Predation in Telecommunications: Are Line-of-BusinessRestraints Needed?

(S. Gates, et al.).

Empirical Tests of RBOC Leveraging and Cross-Subsidization (R.Higgins & M. McDonald).

Richard S. Higgins is the author of Deregulating Telecommunications: The Baby Bells Case for Competition, published by Wiley.

Paul Harold Rubin is an American economist and the Samuel Candler Dobbs Professor of Economics at Emory University. He was President of the Southern Economic Association in 2012-2013. He is also a research fellow at The Independent Institute.

In 1984, the Department of Justice settled its antitrust case against AT&T. The agreement, embedded in the Modification of Final Judgment, led to a divestiture of the local telephone exchanges from AT&T to the Regional Bell Operating Companies (known as the ?Baby Bells?). This agreement gave unprecedented power over a major US industry to one man, Judge Harold Greene of the US District Court of the District of Columbia. The Baby Bells could not enter any line of business without approval from Judge Greene. With technological change it became increasingly desirable for the Baby Bells to enter different lines of business, but each attempt was subject to legal challenge and lengthy, costly litigation. In 1994, the Baby Bells mounted a major legal challenge to the Modification of Final Judgement (MFJ). As part of their strategy, they asked leading scholars in the field to examine the costs and benefits of the MFJ and provide evidence in the form of affidavits regarding its effect. Using a cost-benefit framework, the conclusion of the analysis is that the MFJ should be vacated and competition should be allowed in the industry. Deregulating Telecommunications draws together a group of leading practitioners and academics in the fields of regulation, industrial organisation and antitrust to explore:

• A cost-benefit analysis of the 1984 AT&T antitrust settlement
• Theoretical and empirical studies that analyse the results of the settlement from its inception in 1984 to 1994
• An explanation for the recent policy decisions to reduce the amount of regulation in telecommunications
• Analysis vital to predicting the results of any deregulation in telecommunications in the future

This book will prove invaluable to economists interested in telecommunications, as well as those interested in antitrust and in regulation.