Do Unbundling Policies Discourage CLEC Facilities-Based Investment?

17 Pages Posted: 21 Apr 2003  

Robert W. Crandall

Brookings Institution; AEI-Brookings Joint Center for Regulatory Studies

Allan T. Ingraham

Economists Incorporated; affiliation not provided to SSRN

Hal J. Singer

Economists Incorporated

Date Written: March 12, 2003

Abstract

An expanding economics literature has examined the theoretical linkages between mandatory unbundling in the telecommunications sector and the incentives to invest in facilities by both incumbent local carriers and competitive carriers. Recent empirical evidence that substantiates the theory has emerged. That literature documents CLECs' reluctance to make facilities-based investments instead of availing themselves of incumbents' UNEs at low regulated prices that are based on total element long-run incremental costs (TELRIC). By examining the variation in facilities-based investment in loops across U.S. states, we find that an increase in the UNE loop rate increases CLEC facilities based lines for any reasonable own-price elasticity of demand for CLEC service.

Keywords: telecommunications, investment, unbundling, CLEC, UNE-P

JEL Classification: L0, L5, L96

Suggested Citation

Crandall, Robert W. and Ingraham, Allan T. and Singer, Hal J., Do Unbundling Policies Discourage CLEC Facilities-Based Investment? (March 12, 2003). Available at SSRN: https://ssrn.com/abstract=387421 or http://dx.doi.org/10.2139/ssrn.387421

Robert Crandall

Brookings Institution ( email )

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States
202-797-6291 (Phone)
202-797-6181 (Fax)

AEI-Brookings Joint Center for Regulatory Studies

1150 17th Street, N.W.
Washington, DC 20036
United States

Allan T. Ingraham (Contact Author)

Economists Incorporated ( email )

2121 K St NW
Suite 1100
Washington, DC 20037
United States
202-747-3540 (Phone)

HOME PAGE: http://www.naviganteconomics.com

affiliation not provided to SSRN

Hal J. Singer

Economists Incorporated ( email )

2121 K Street N.W.
Suite 1100
Washington, DC 20037
United States
202-747-3520 (Phone)

HOME PAGE: http://www.ei.com/viewprofessional.php?id=71

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