# How to Treat the Costs of Shared Voice and Video Networks in a Post-Regulatory Age 

November 27, 1996 • Policy Analysis No. 264 

By Alfred Kahn 

[ 

Download PDF 

](https://www.cato.org/sites/cato.org/files/pubs/pdf/pa264.pdf) 

p align=“center”>**Table of Contents**

| Introduction | 2 |
|---|--:|
| Prerequisites of Efficient Innovation under the 1996 Telecommunications Act | 5 |
| Application of the Incremental Cost Rule and the Prices of Regulated Services | 7 |
| The Relationship of Incremental to Stand-Alone Costs | 8 |
| Distributing the Benefit of Economies of Scope | 11 |
| The Fairness and Efficiency of Competition Under the Proposed Assignment of Investment Costs | 13 |
| The Conflict between Recourse to Cost “Allocations” and the Telecommunications Act | 16 |
| The Commission’s Only Correct Course Is to Abandon Its Cost Allocation Proceeding | 19 |

[![Media Name: pa264.jpg](/sites/cato.org/files/styles/serial_cover_phone/public/pubs/covers/pa264.jpg?itok=OICUIMZ0)](https://www.cato.org/sites/cato.org/files/pubs/pdf/pa264.pdf) 

### Download This Policy Analysis

##### How to Treat the Costs of Shared Voice and Video Networks in a Post-Regulatory Age 

[ 

Download PDF 

](https://www.cato.org/sites/cato.org/files/pubs/pdf/pa264.pdf) 

##### About the Author 

Alfred E. Kahn is the Robert Julius Thorne Professor of Political Economy, Emeritus, Cornell University and Special Consultant with National Economic Research Associates, Inc. (NERA). 

[![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) 
This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/). 

[ 

Download PDF 

](https://www.cato.org/sites/cato.org/files/pubs/pdf/pa264.pdf)