Subject: [NEXTEL-1] TAXES AND REGULATION: THE EFFECTS OF MANDATES ON WIRELESS PHONE USERS

From: [email-masked]
Date: Thu, 16 Oct 2003 02:09:51 -0400

Excellent data, good read.

Release 10.18 October 2003 Periodic Commentaries on the Policy Debate
TAXES AND REGULATION: THE EFFECTS OF MANDATES ON WIRELESS PHONE USERS
By Thomas M. Lenard and Brent D. Mast*

Executive Summary

The U.S. has experienced a great boom in wireless services during the past decade.
Starting in 2001, wireless subscribers in the U.S. exceeded residential wireline
telephone subscribers for the first time, and the gap is widening rapidly. As of
the end of 2002, more than 140 million Americans were using cellular and personal
communications service (PCS) phones.

The wireless industry has developed in an intensely competitive environment, and
there are currently about 175 carriers serving the nation’s wireless subscribers.
Although the prohibition on traditional price-entry regulation is a major factor
in the wireless success story, the notion that wireless communications have been
“deregulated” is not correct. In fact, wireless operates in a highly regulated
environment. And, as wireless applications converge with traditional
telecommunications functions (e.g., wireline telephony), pressures build to bring
wireless into the traditional framework of telecommunications regulation and
taxation.

Indeed, the now arguably “mature” wireless sector is under increasing pressure on
a number of regulatory fronts – most notably in the areas of taxation and
regulatory mandates. Wireline telephony is one of the most heavily taxed services,
and states and localities are moving to apply similar treatment to wireless. In
addition, wireless is increasingly being subjected to regulatory mandates ranging
from requirements to provide local number portability to enhanced-911 services.

Because wireless telephony is such a competitive market, these regulations deserve
close scrutiny. In the absence of clear evidence of market failure, we can expect
private suppliers to compete to provide consumers with the service attributes they
want. Indeed, if a mandated service were sufficiently valuable to consumers,
carriers would have incentives to provide it voluntarily. Moreover, in such a
competitive
* Thomas M. Lenard is vice president for research and senior fellow, and Brent D.
Mast is research fellow, both at The Progress & Freedom Foundation. The views
expressed here are those of the authors and do not necessarily reflect the views
of the foundation, its officers or its board of directors.
environment the costs associated with these mandates will all be passed on to
consumers.
Some of these new mandates may be justified. Yet there is little if any systematic
analysis being conducted of their effects, individually or combined, on consumers.
The FCC is an independent regulatory agency, exempt from requirements for rigorous
cost-benefit analysis that apply to major executive-branch rulemakings, and few,
if any, states impose such requirements of their own.
This study is an attempt to begin filling this gap. We develop a list of the major
regulations and taxes affecting the wireless industry. We examine national and
state-level mandates now in place, as well as major new proposals. For each
mandate, we review the existing cost (and where available benefit) estimates. We
then project costs based on existing publicly available cost estimates and
financial analyses, as well as our own calculations. Finally, we estimate the
effect of the various regulations and taxes on the wireless market.

More:
http://www.pff.org/publications/pop10.18wirelessmandates.pdf
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