Exploring Issues in Telecommunications

Aug 13, 2008Aug 14, 2008


Session One: Wednesday, August 13th
Universal Service Reform
Dr. Jerry Ellig 
Senior Research Fellow
Mercatus Center at George Mason University

Session Two: Thursday, August 14th
Understanding the Issues in Net Neutrality
Jerry Brito
Senior Research Fellow
Mercatus Center at George Mason University

The past decade has produced dramatic changes in the telecommunications industry.  While the emergence and diffusion of new technologies has radically changed the way in which we communicate, it has also created a host of new regulatory issues for policy makers to address.

Under the 1996 law, local and long-distance telephone companies are required to contribute to universal service programs that subsidize local telephone service to households in low-income households and telephone companies in rural areas. Today, however, the universal service fund is running into problems. As people move away from traditional phone service into new technologies, the funds available for universal service have declined. Policymakers face the challenge of identifying new ways to finance telephone subsidies for poor and rural households while minimizing economic distortions and accurately measuring whether or not the programs achieve their desired outcomes.

Another contentious issue facing Congress is the current debate over “net neutrality.” Proponents argue that net neutrality is necessary to protect the Internet from service providers who could act as “gatekeepers” by putting them in a position where they could favor some products and services over others, and extort payments from content providers for preferential treatment. Critics contend that net neutrality obligations would create disincentives for private investment in the broadband infrastructure that delivers content and applications to consumers.

In order to provide some economic insights into these difficult questions, the Mercatus Center will host a two-day course for congressional staff. Participants will address such questions as:

  • What does economics teach us about the most effective ways to achieve telecommunications policy goals? 
  • What are the cost and benefits of the universal service policy? 
  • Should the commission use “reverse auctions” to award subsidies to the party that offers to serve an area at the lowest subsidy? Should mobile phone and broadband service become part of the universal service bundle? 
  • What are the latest developments in the net neutrality debate? What are arguments in favor of and opposed to “net neutrality”? What economic features of telecommunications networks are relevant to the net neutrality debate?