university of colorado centris temple university & centris copyright © 2009 james alleman. all...
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University of ColoradoCentris
Temple University & CentrisCopyright © 2009 James Alleman. All Rights Reserved.
Universal Service: A New Definition?
James AllemanAniruddha Banerjee
Paul N. Rappoport
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James Alleman University of Colorado
IssuesPolicy FrameworkAuctionsConclusions
Agenda
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James Alleman University of Colorado
Need for Universal Service? Definition of USO?What Technology?
Issues
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James Alleman University of Colorado
Need for Universal Service? Externalities?Broadband?Economic development?
Issues
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James Alleman University of Colorado
Externalities?Not an issue in developing worldIssue is developing world
Economic DevelopmentNot proven -- neither BB or NB
Best allocation of resources?
Need for Universal Service?
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James Alleman University of Colorado
Need for Universal Service? ...
Definition of USO?Narrow bandBroadbandVoice/data connectivityVideo connectivity
Issues
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James Alleman University of Colorado
Definition of USO?
Narrow bandTraditionalEasier to implement
BroadbandCostly, fixedLess expensive, wirelessEconomic contribution?
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James Alleman University of Colorado
Need for Universal Service? ...
Definition of USO?...
TechnologyFixed?Mobile?Wireless, all types?
Issues
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James Alleman University of Colorado
Fixed?TraditionalWireless substitutes for
Mobile?Less costlyUbiquitous
Wireless, all types?
Technology
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James Alleman University of Colorado
Mobiles/main lines
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James Alleman University of Colorado
(partial list)
Nokia 3250Nokia 5500 Sport Nokia 5700Nokia 6110 NavigatorNokia N95Nokia N95 8GBNokia N96...
VoIP Compatible Phones
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James Alleman University of Colorado
3G plus WiFi
TrueMove iPhone (announced in 16.01.2009)
3G plus WiFi
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James Alleman University of Colorado
IssuesPolicy Framework
Agenda
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James Alleman University of Colorado
Agenda
Policy FrameworkGoal: Universal Service
Efficiency ConcernsCross-Subsidies
InstrumentFinancing/Funding
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James Alleman University of Colorado
Policy Framework
Universal Service Obligation:Network Connectivity/Service
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James Alleman University of Colorado
Economic EfficiencyDistributional Impact/EquityExternalities Addressed?
High market penetration of exchange service in DC's
High mobile penetration in LDC's
Policy Framework: Concerns
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James Alleman University of Colorado
Not Addressed Incidence Penetration Needs/Means Test
What are the Social Goals?
Policy Framework
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James Alleman University of Colorado
DemandPatterns
User Subsidy
ServiceSubsidy
Incidence
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James Alleman University of Colorado
Universal Service Obligation
Cross-subsidies: Inefficient Not marginal subscribers Not targeted If targeted
°Externality addressed°Comports with efficient pricing: High access charge & usage charge Closer to Marginal Cost
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James Alleman University of Colorado
Q Q '
Price
Quantity
AC, MCP '
P A B
Service Subsidy
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James Alleman University of Colorado
Universal Service Obligation
InefficientNot marginal subscribersNot targetedNot desired
Demand relationships
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James Alleman University of Colorado
Demand Relationships
Subscriber Access: Derived Demand
Exchange usageToll usageMobile usageOther services
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James Alleman University of Colorado
Demand Relationships
Access Is Derived DemandDemand Cross-elasticities
Access demand has a cross- elasticity with toll demand
Mobile demand has a cross- elasticity with traditional service
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James Alleman University of Colorado
Economic EfficiencyDistributional Impact/EquityExternalities Addressed?
High market penetration of exchange service in
DC's
Policy Goals: Concerns
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James Alleman University of Colorado
Efficiency Concerns
InefficientNot marginal subscribersNot targetedNot desiredDemand relationships
Companies Subsidized
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James Alleman University of Colorado
No Market TestInefficientInhibits CompetitionExpensivePreemptive
Cross-Subsidies
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James Alleman University of Colorado
Q Q '
A B
Price
Quantity
AC, MCP 'P
Efficient Entrant's MC
Preemptive
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James Alleman University of Colorado
PriceAC, MC
P 'P
Efficient Entrant's MC
Efficient entrant excluded from the market
Preemptive
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James Alleman University of Colorado
Recommendations
Subsidies
No Cross-SubsidesTargeted Subsidies, if anyGovernment Financed
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James Alleman University of Colorado
IssuesPolicy FrameworkAuctions
Agenda
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James Alleman University of Colorado
Auctions
Auctions:Assign ValueMinimize PaymentsVoluntary ActionsDiscipline RegulatorEfficient Entry & Investment
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James Alleman University of Colorado
Assign Value
Market MechanismNot Cost-of-service BasedEliminates Cost Debates
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James Alleman University of Colorado
Minimize Payments
Market DeterminedSelf-determined market structure Replaces exclusive franchise
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James Alleman University of Colorado
Auctions
Assign ValueMinimize PaymentsVoluntary ActionsDiscipline Regulator
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James Alleman University of Colorado
Discipline Regulator
No Regulatory GamingNo Regulatory Determination:
Who is subsidized or The size of the subsidy
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James Alleman University of Colorado
Auctions
Assign ValueMinimize PaymentsVoluntary ActionsDiscipline RegulatorEfficient Entry & Investment
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James Alleman University of Colorado
Auctions
Assign ValueMinimize PaymentsVoluntary ActionsDiscipline RegulatorEfficient Entry & Investment
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James Alleman University of Colorado
IssuesPolicy FrameworkAuctionsConclusions
Agenda
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James Alleman University of Colorado
Conclusions
Define USO ObjectivesService Neutral Fund via Government Auctions Fulfill Policy Goals
Technological/service neutralCost minimizingNo regulatory gaming
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James Alleman University of Colorado
Contact Information
Dr. James Alleman2491 Twenty-third StreetBoulder, CO 80304-3707
phone: +1 303 443-4465mobile: +1 917 294-1688e-mail: [email protected]://www.colorado.edu/engineering/alleman/
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University of ColoradoCentris
Temple University & CentrisCopyright © 2009 James Alleman. All Rights Reserved.
Universal Service: A New Definition?
James AllemanAniruddha Banerjee
Paul N. Rappoport