| James Prieger, University of California, Davis |
| Regulation, Innovation, and the Introduction of New Telecommunications Services: a Queuing Theoretic Approach |
| Session: C-1-15 Friday 11 August 2000 by Prieger, James |
| I examine the effects of regulation on the innovation and introduction of new telecommunications services in the U.S.--effects not previously quantified. I draw data from the Federal Communications Commission's Comparably Efficient Interconnection regime. An interim of lighter regulation provides an "experiment" to test the regulatory regime's impact on innovation. The econometric model, formally equivalent to an M(t)/G(t)/$\infty$ queuing system, comprises an arrival process (for service innovation) followed by a duration process (for regulatory delay), both with time-varying hazard rates. I find that relaxed regulation benefits consumers in two ways: firms introduce more services, and services become available to consumers quicker. The model predicts that these two factors combine to spur 57% more services to consumers during the study period if the lighter regulation had been in place, compared to if the CEI regime had been in place the entire time. |