Forward looking telecommunications cost models

Abstract

William Sharkey’s paper provides a useful overview of the mechanics, processes, and environment in which cost studies are being performed in support of prices for unbundled network elements and determining universal service support. His discussion explicitly or implicitly raises several issues that go to the heart of the telecommunications industry’s regulation:

• The enormous task regulators face in determining costs and setting prices

• The importance of understanding the intent of regulatory actions and how outcomes can differ from the intended results

• Whether the stated objectives can be obtained by prescribing outcomes or through a process that allows competition to produce its results.