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NRRI relases new study: Deregulation may harm market's efficiency

"Regulation and Efficiency: A Reappraisal of Research and Policies"
William G. Sheperd

The main question in this study is whether traditional regulation has deeply 
harmed efficiency. If the harms have been great, and deregulation could easily 
create competition and efficient results, then the general case for removing 
regulation is strong.

Economists have indeed shown that there were inefficiencies in various 
transport industries under regulation, and the resulting deregulation has 
generally promoted efficiency. But after 1975 these points were expanded into a
denunciation of all regulation, supposedly because it always harms efficiency 
deeply. What was true of transportation regulation was said to hold for all 
sectors, including electric and telephone service.

Such assertions are ripe for a skeptical review, following the deregulation 
events of the 1980s. This study re-examines the concepts of the issue and then 
reappraises the most frequently cited empirical studies. It finds that the 
efficiency losses (outside transportation) have not been shown to be 
substantial after all.

The study next turns to the alternatives to traditional regulation. One 
alternative method is to rely upon competition, after removing regulation. But 
when is competition really effective? The study considers the conditions that 
do provide effective competition, using ideas from the complex field known as 
antitrust economics. It turns out that the conditions of effective competition 
are strict, and that they are hard to reach when you start from a regulated 
monopoly. Therefore the deregulation of a regulated monopoly will often fail to
achieve effective competition, and the desired benefits will often not occur.

Finally, this study considers ideas of "incentive regulation," particularly 
"price caps." Such incentive-sensitive methods might treat dominant firms more 
effectively than does traditional regulation. If so, they might justify partial
deregulation. But this study notes that they have important limitations. When 
it is applied to complex real situations, "incentive regulation" is often about
as complicated as is conventional regulation, and the resulting efficiency 
gains may often be small or nil.

The upshot is that regulation should be removed only when the industryUs 
technology has already shifted fully to a state of natural competition, with 
room for many strong competitors. Then the dominance by the original monopolist
can be quickly swept away, to be replaced by competition among at least five or
six strong comparable competitors. There also needs to be a lack of entry 
barriers. If all these conditions are met, then competition can be fully 
effective.

But if the natural-monopoly conditions haven't faded entirely away and entry is
not reasonably free, then deregulation is highly risky; it may merely permit a 
continuation of market dominance by the original monopolist. And now there will
be no regulatory protections. That situation of unregulated dominance is likely
to harm efficiency and innovation as much as regulated monopoly does.

To receive a copy of the report, contact NRRI at (614) 292-9404.

               * * * * *

New Research: Reports spotlight government procurement, fiber superhighways

In June 1992, the Strategic Computer and Telecommunications in the Public 
Sector Program of the John F. Kennedy School of Government at Harvard 
University issued a report "Information Technology and Government Procurement, 
Strategic Issues for the Information Age." The report is by Steven Kelman, 
Jerry Mechling and John Springett.


The report concludes that the government's procurement policies are a barrier 
to the effective use of information technologies. Awards are rarely based on 
past vendor performance, and policies prevent information technology analysts 
from effectively using the information about system performance gained from 
previous installations. The result is a  drag on learning, innovation and 
excellence in the use of information technologies within the government.


Likewise, the report suggests that information technologies are being 
inefficiently used in the procurement of other commodities for the government, 
with applications lagging far behind what is possible. The authors suggest that
information technologies can be more effectively used in procurement if 
government agencies: 1) distinguish between commodities and non-commodities, 
thus facilitating the best applications of information technologies within the 
procurement process; 2) prepare for electronic markets by developing 
infrastructures and experience in selected electronic markets, by developing 
electronic procurement aids, and by experimenting with post-audit controls; 3) 
support discretion and organizational learning within procurement divisions by,
among other things, expanding procurement discretion, developing guidelines to 
support evolutionary systems, increasing the weight given past vendor 
performance, and developing the staff, skills and support mechanisms for 
complex and innovation-oriented information technology procurements; 4) target 
reforms on electronic commerce and innovation, more than on procurement per se.

For information on obtaining a copy of the report, call the Strategic Program 
at (617) 495-3036.


Fiber superhighway
A new report is available from the Progressive Institute: "Shortcut to the 
Information Superhighway: A Progressive Plan to Speed the Telecommunications 
Revolution," by Steven R. Rivkin and Jeremy D. Rosner. The paper proposes 
involving a new player in creating a national fiber system: the electric 
utilities. The electric utilities, they argue, would be interested in using 
such a network to implement time of day-based usage charges, and the utilities 
might wish to enter into joint ventures with local telephone companies and 
others. Copies of the report can be obtained from The Progressive Policy 
Institute, 316 Pennsylvania Ave. S.E., Suite 555, Washington, D.C., 20003, 
Phone: (202) 547-0001, and Fax: (202) 547-0099.




Recent papers from the University of Nebraska

The following are the most recent additions to the Research Paper Series 
published by the International Center for Telecommunications Management at the 
University of Nebraska at Omaha. The price is $4 per paper. ICTM invites 
submission of research papers to be included in the series. Send orders or 
paper to Ms. Tallie Bishop, ICTM, University of Nebraska at Omaha, 304 CBA, 
Omaha, NE 68182-0459.


#17: "Intellectual Property Law Protection as it Applies to Computer Software,"
by Alan F. Morre and Michael J. O'Hara. June 1992.


#16:  "The Single Market for European Public Mobile Communication," by Zixiang 
Tan. June 1992.


#15: "Application of Activity-Based Costing in a Service Organization," by 
Richard Ortman, Thomas A. Buelt, and Lawrence Jefferies.


#14: "The Case for Rural Telecommunications Networks and Policy Implications," 
by Sufi M. Nazem and YaShin Liu. April 1992.

#13: "The Effects of Telecommunications Deregulation in Nebraska on Investment 
Behavior," by Din Liu. April 1992.

#12: "Telecommunications Technology and Rural Hospitals: A Partnership Destined
for Success?"  by Keith K. Turner and Frances Mallory, April 1992.

#11: "Exploring the Availability and Use of Advanced Information Technologies,"
by Francis J. Van Wetering. March 1992.

#10: "The Determinants of Traffic and Duration in International Telephone 
Communications," by Sam Ramsey Hakim. March 1992.

                    * * * *

Book assesses mass media's role in the 1990s

The October/November 1992 issue of Communication Booknotes features reviews by 
editor Christopher Sterling of books on  journalism, general communication, 
communication research, the electronic media, European communication, 
communication history and telecommunications. Reprinted below is the review of 
Sterling's choice for this issue's "Book of the Month."
MEDIA PERFORMANCE: MASS COMMUNICATION AND THE PUBLIC INTEREST
by Denis McQuail (Newbury Park, CA: Sage Publications, 1992--$65/$24., ISBN 
0-8039-8294-1 hard; 0-8039-8295-X paper. 350 pp).


This is a new far-reaching text by the University of Amsterdam-based scholar 
that stands back, takes in developments in many countries, and suggests new 
frameworks for assessing media in the 1990s. This is important reading from a 
long-time critical observer of the media scene. As the author puts it: "The 
present book constitutes a link between several long-standing interests of my 
own; theory about communications and society; empirical research into media 
content and media audiences; development of media policy...A central aim of the
book is to address the problem of the gap between normative social theory of 
the media and applied research."


The 23 chapters appear in eight major sections:
mass communications and society--public communication and the public interest 
as contested territory, traditions of inquiry into media performance, and the 
public interest in communication;
* media performance norms--the newspaper press, broadcasting, and a framework 
of principle for media assessment;
* research models and methods--media organizational performance models and 
research options;
* media freedom--concepts and models from structure to performance, as well as 
the organizational environment;
* diversity--varieties and processes of diversity, taking the measure of 
diversity in media reflection, media access and audience choice;
* objectivity--concepts of objectivity, a framework for objectivity research, 
measuring objectivity (news as information, the evaluative dimension of news);
* media order and social control--media maintenance of public order, policing 
the symbolic environment, solidarity and social identity;
* media in culture--questions of culture and mass communication, cultural 
identity and autonomy.

The book concludes with a discussion of changing media and changing mores and 
their implications for media assessment. There are about 30 pages of references
and an index.


This is important reading because of the breadth and depth of the arguments and
discussion, because the author's own record and long-term thinking on these 
things (this project has been under way for some 15 or more years), and because
of its timing, as we all search for new and better ways of assessing media in 
changing society. McQuail takes into account technology, changing economic and 
political ideologies in a variety of countries and changing conceptions of 
print and electronic media. Highly recommended.


                         * * * * *

Did You Read 655 Books on
Comunication Last Year?

We Did!!!

Last year, Communication Booknotes
reviewed 655 new books on the topics of:
Telecommunication technologies
     International communication
     Electronic media content
     History of electronic media
     Communication processes and effects
     Communication industries
     Journalism
     German media books
     Telecommunications policy
     Telecommunications management
     Commonwealth communications
     Criticism and media content
     New publisher's series
     Mass media
     Popular culture
     U.S. government documents
     Communication policy
     Scholarly communication
     Production guides
     Presidential communication
     Canadian communication
     Broadcasting
     History of computers and computing
     History of communication
     General communication
     Comics and comic art
     Communication research
     Australian media
     British communications
     Motion pictures
Communication Booknotes provides early information and reviews of new 
publications in the field of communications. The Ohio State University's Center
for Advanced Study in Telecommunications (CAST) is the publisher of 
Communication Booknotes. Christopher Sterling, founder of the publication, is 
editor, joined in recent years by a number of regional and topical contributors
from around the world. Subscriptions and sample copies are available from CAST 
by sending your request to the address below:
COMMUNICATION BOOKNOTES
CAST
210 Baker Systems
1971 Neil Ave.
Columbus, OH 43210-1971