The subsidy myth: Who pays for the local loop?

Robert D. Denious

Telecommunications Policy, 1986, vol. 10, issue 3, 259-267

Abstract: Telephone industry spokespersons in the USA have argued that, over the past 50 years, long distance has subsidized local service -- a view which has been widely accepted. This article argues that the existence of the subsidy is a myth, and that policy decisions should not be made based on its acceptance. The author shows the flaws behind the telephone companies' characterization of the local loop as a cost entirely arising from local service, on which they base their subsidy argument. The author argues that the misconceptions about the telephone subsidy need to be rectified, in order to be able effectively to evaluate proposals for telephone regulation.

Date: 1986
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