Thomas M. Jorde, J. Gregory Sidak, and David J. Teece
In
this Article, we examine the neglected tradeoff between innovation and
mandatory unbundling of telecommunications networks. Our analysis is prompted
by the Supreme Court’s 1999 decision in AT&T Corp. v. Iowa Utilities Board
and by the Federal Communications Commission’s Second
Further Notice of Proposed Rulemaking released later the same year, which
address which network elements in the local telecommunications network shall be
subject to compulsory sharing among competitors at regulated cost-based rates.
Economic analysis indicates that mandatory unbundling at prices computed
on the basis of the total element long-run incremental cost of the various
network elements belonging to an incumbent local exchange carrier will
adversely affect the ILEC’s incentives not only to upgrade or maintain existing
facilities, but also to invest in new facilities. Mandatory unbundling at
TELRIC prices will also encourage competitive local exchange carriers to
deviate from the socially optimal level of investment and entry. Finally, the
confluence of mandatory unbundling and other FCC
policies aggravates the distortion of investment decisions.
James B. Speta
Handicapping the Race for the Last Mile?: A Critique of Open Access Rules for Broadband Platforms
“The
technology to supply almost limitless bandwidth is now at hand. Broadband
networks already occupy the top tiers of the telephone network, operated by
regional and national telephone companies, and the top tiers of the broadcast
networks, operated by video carriers. Only the last mile remains to be
conquered.” This Article evaluates the battle to conquer the last mile, by
surveying the leading platforms and technologies for providing broadband
telecommunications to individual customers. The Article also describes current
regulation of those platforms, focusing on the extent to which the owners must
provide open access to unaffiliated companies wishing to use the platforms.
Addressing current arguments made by companies seeking mandatory open access
rules for broadband platforms, this Article concludes that the nature of
consumer demand for a broadband access platform, which will be strongly
responsive to the variety of content services made available over the platform,
makes open access rules unnecessary and potentially counterproductive.
Kermit Roosevelt III
Understanding Lockups: Effects in Bankruptcy and the Market for Corporate Control
This
Article examines the effects of lockups in the market for corporate control and
bankruptcy. Developments in the analysis of lockups in the market for corporate
control have provided prescriptions that are accurate from either an ex ante or
ex post perspective. This Article employs auction theory to articulate a
synthesis of the current theory that is satisfactory from both perspectives.
Theory addressing lockups in bankruptcy is unsatisfactory from both an ex ante
and ex post context. By delineating the crucial differences between bankruptcy
and the market for corporate control, this Article develops appropriate
standards for governing lockups in bankruptcy.
Note
Brooks E. Allen
The Price of Reform: Cost-Sharing Proposals for the
Medicare Home Health Benefit
Faced with an impending Medicare
“crisis,” scholars and policymakers have advanced a variety of proposals for
reforming the program. This Note critically examines one proposed solution that
draws on an established technique of health policy and insurance—beneficiary
cost-sharing—to reduce expenditures in the rapidly-growing Medicare home health
program. Recognizing that cost-sharing mechanisms might generate some savings,
the author ultimately rejects these proposed remedies in light of their
inequitable consequences and practical limitations.
This Note proceeds by establishing a normative framework for
assessing cost-sharing proposals. The author then evaluates the normative
implications of an array of cost-sharing mechanisms, taking into account the
unique demographic and usage characteristics of the beneficiary population.
Drawing on empirical research into the effects of cost-sharing on such
variables as income and health status, this Note explores the demand response
of beneficiaries. The author concludes that cost-sharing likely would be either
ineffective or inequitable. In contrast, alternative reform proposals are
likely to generate cost-savings without the normative limitations of
beneficiary cost-sharing. This Note urges the abandonment of attempts to extend
cost-sharing to the home health benefit, and calls for a further exploration of
alternative methods to assume the program’s long-term solvency.
Commentary
Jim Chen
Hope a Better Rate for Me