Policy Analysis No. 264

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

By Alfred Kahn
November 27, 1996
p align=”center”>Table of Contents



Prerequisites of Efficient Innovation under the 1996 Telecommunications Act


Application of the Incremental Cost Rule and the Prices of Regulated Services


      The Relationship of Incremental to Stand-Alone Costs


      Distributing the Benefit of Economies of Scope


The Fairness and Efficiency of Competition Under the Proposed Assignment of Investment Costs


The Conflict between Recourse to Cost “Allocations” and the Telecommunications Act


The Commission’s Only Correct Course Is to Abandon Its Cost Allocation Proceeding


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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).