Competition in Communications

Abstract

In the Memorandum Opinion and Order and Notice of Inquiry and Proposed Rule Making, adopted on 9 March 1978 by the FCC, the Commission raised several important questions of social policy regarding the public message telegraph service (hereafter PMS). In the following analysis I shall demonstrate that there is a public need for the PMS which involves social benefits which significantly exceed the private benefits as measured by the market’s willingness to pay for PMS. Moreover, this public need can not be adequately satisfied by alternative existing voice and record services, for none of the alternatives permits universal and easy entry into a network for rapid written communication to almost any point on the face of the earth. Furthermore, given the current alternative record transmission services available on high density routes to big users, if the FCC permits any further segmentation of the remaining PMS market by common carriers, the inevitable outcome is that PMS will not be economically viable without either direct or cross-subsidization by sums which far exceed the current levels of cross subsidization that occurs between subcategories of PMS users and between customers of PMS and other WU services. In other words, if the Commission permits other carriers to provide a PMS service (or a close substitute) for selective submarkets of the nationwide universal PMS market, then the FCC is dooming the universal PMS system to either extinction or else larger and larger subsidies (or even nationalization) will be required in the future to keep PMS operating.

Testimony before the Federal Communications Commission, February 1969.