Title: CLEC access charges and the problem of monopoly power

Authors: Noel D. Uri

Addresses: Competitive Pricing Division (Rm 5-A207), Common Carrier Bureau, Federal Communications Division, 445 12th Street, SW, Washington, DC 20554, USA

Abstract: The analysis in this paper looks at the problem of excessive originating and terminating access charges imposed by some CLECs in the USA. The problem arises because the current institutional structure provides an incentive for CLECs to charge for access service in excess of what a competitive market would indicate. An examination of the data shows that the problem of excessive access charges imposed by CLECs is very real. An analysis of terminating access charges for September 2000 reveals that average terminating access charges billed to three IXCs are excessive, exceeding average price cap regulated ILEC access charges by 370% to 470%. A couple of solutions to the problem are offered including a first-best solution whereby the calling party would be required to pay for the originating access service and have the receiving party pay for terminating access service. A second-best solution would be to limit a CLEC|s access charges to an IXC to be less than or equal to the access charges of the ILEC with which it directly competes for customers.

Keywords: access charger; competitive local exchange carriers; interchange carriers; monopoly power.

DOI: 10.1504/IJSTM.2002.001635

International Journal of Services Technology and Management, 2002 Vol.3 No.3, pp.349-361

Available online: 13 Aug 2003 *

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