- Email: [email protected]
The data communications conference on teleconferencing and satellite communications systems technology
Conferences
organizations can insure themselves against risks by other means. Several questions were asked by the audience about issues raised. For M Deweze wondered example, whether the user would be able to participate in the drawing up of his secret password-which M Barth was mainly opposed to (although this does actually occur in database utilization). M Berry pointed out that the validation problem also arises with regard to more traditional forms of telecommunications (eg recording telephone usage, invoice, etc). He also raised the question of the guarantees tha: are offered by the administrators of the telecommunications network (their responsibilities and obligations, etc). M Chamoux pointed out the high level of user protection guaranteed by the French post office, and stated that this aspect must not be neglected when electronic mail is in operation. In other areas new methods are being planned or applied (eg the Transpac agreement, and studies on Transfax).
Cool lawyers Professor Cathala was the final speaker, and put forward some of his thinking on the subject. He contrasted the coolness of lawyers with the excitement of technicians: since the start of the 19th century French law had, on the whole, known a high degree of stability, while technology had changed at a rapid pace. If law is well framed. then it can exist for a long time and take account of the invasion of new technologies. Is telematics going to pose problems on the scale of those which were caused by the development of cheques? After having briefly touched on the innovations brought by the legislation of 12 July 1980, notably the freedom of validation, he stated that in his view the real problems have not yet arisen, eg questions relating to the triangular (or even ‘quadrangular’) relationships involved, viz when one takes into account the eventual intervention of the commercial sector of the network, etc. It is essential to provide, for the new methods of payment, the same legal protections as those accorded the cheque. And it is certainly true. as M
to actLloret stated. that a kind of ‘legal General des Telcommunications vacuum’ exists, especially in the case of ively join in as such participation is certainly essential to a debate on telethe joint use of new and traditional matics. Yet the meetings which occur means of payment. It is important to recognize that the on occasions of this kind undoubtedly number of disputes has been very contribute to their success. small, which is reassuring. Indeed, it is Pierre Tornato, essential to be sparing in legislation. REST, because it is indeed the last resort - as Paris, France Carbonnier said, ‘The law is a necessary evil’. Those interested in obtaining the Despite the debate being somewhat documentation from this round table abstract at times. it stimulated interest should write to Pierre Tornato, lnstitut de Recherches Economiques et Sociales sur among a good number of the 2.50 par- les T6l&zommunication, 8 All&e des ticipants. It was unfortunate that there Blancs-Bouleaux, Fresnes, 94260 France. was no representative of the Directorat
Teleconferencing: a gathering of experts The Data Communications Conference on Teleconferencing and Satellite Communications Systems Technology, 24-26 June 1981, New York City
Even in an era of an abundance of conferences on teleconferencing and communications satellite systems, the Data Communications Conference on both subjects served as a tremendous attraction for the top talent in the field both as speakers and as attendees. Virtually every notable expert in the field of teleconferencing was in New York for this conference. It also attracted many current and potential users of teleconferencing. but few attendees were from countries other than the USA. Although the conference got off to a very poor start, due to the monopolization of the podium by the conference organizer. a great deal of new information was conveyed to the audience. The conference agenda was split almost down the middle between teleconferencing and satellite communications. The first day was to be dedicated to the topic of teleconferencing. The opening remarks, although introduced to be about teleconferencing and thought to be factual, turned out to be neither. Instead, a great deal of interesting information regarding the trends in telecommunications along with the potential impact of the right and left hemispheres of the human brain served as a backdrop upon which occasional
TELECOMMUNICATIONSPOLICYDecember 1981
related bits of information about teleconferencing were put forth. Much of the material used was quite old or in some cases only marginally factual. By the morning’s end the audience was noticeably restless and was anticipating the afternoon’s remarks. to be delivered by Martin Elton and Robert Johansen. The afternoon remarks were a great improvement over those of the morning session. Through the use of a dialogue technique first tried over a teleconference at last year’s Red Bank ‘Human Factors in Telecommunications’ symposium, Elton and Johansen limited their topics of discussion to a set of major points each relying upon the other for interaction over the points, to reveal subtleties not initially discussed. Johansen’s points were buttressed by visuals and anecdotes collected recently from teleconferencing systems. His first point was that ‘The culture of the [teleconferencing] system has to be compatible with that of the users’. In support of all this, Johansen showed 35 mm slides illustrating a series of teleconferencing rooms in North America. As each slide was shown he asked the audience to identify the type of individual whose culture this room might
333
Conferences
match. In one of the most illustrative, the room of a well known engineering firm was shown: this seemed to be very bare, with loose wires plainly in view. The reasons for the classic failure of the MRC-TV system in New York were shown when the slide of that room illustrated a dramatic disparity between the culture of the room and the culture of the group selected to use it. Another point raised by Johansen and discussed by himself and Elton was that although leadership skills are very important, they are different in a teleconference from the skills required in a face-to-face discussion. In an interesting departure, Johansen suggested that, contrary to the research literature, conflict-intensive communication could actually be conducted during a teleconference. According to Johansen, ‘encouraging good fights is tricky, as is avoiding bad fights’. His point was that even though the literature suggests that persuasion, negotiation and bargaining cannot be conducted effectively in a mediated meeting, the anecdotes emerging from the regular use of teleconferencing today suggest that they can and are.
Sound and vision The major points raised by Martin Elton included some which are well documented in the research literature. For example, he reiterated the fact that teleconferencing is still not a proven substitute for travel, even though major corporations today believe it to be. Through the use of a pun he reiterated the requirement for highquality audio in a teleconference: ‘There’s more to teleconferencing than meets the eye’. Both Elton and Johansen discussed the fact that there are a variety of teleconferencing systems that can be used and that one of the problems today is the misuse of the term. Today, it seems that many of those who are new to the field feel that teleconferencing implies telephone or audio-only teleconferencing and that this is somehow different conceptually from video conferencing (by which they mean full motion video teleconferencing). Johansen and Elton prefer the use of teleconferencing as a generic term, meaning interactive group com-
334
munications through an electronic medium. The Data Communications Conference was a three-day conference. On the second day, after a brief overview of satellite communications systems, the presentation shifted back to teleconferencing. John Malone, a relatively unknown figure in the field of teleconferencing gave a very good presentation on the implementation of teleconferencing in an industrial setting. Malone is President of the Eastern Management Group, a management consulting firm headquartered in New Jersey. His paper was based on a presentation made at the 1980 Teleconferencing and Interactive Media Conference held at the University of Wisconsin-Extension. He laid out a series of steps to be followed in introducing teleconferencing to a corporation. After identifying the three-target organizational divisions within a corporation as manufacturing. marketing, and general management, Malone attempted to identify manufacturing as the one most ripe for the application of teleconferencing. Although presented logically. his conclusion is not supported by the work of others in the field, who feel that one can only identify an organizational division as ripe for the application of teleconferencing by looking at each corporation on an ad hoc basis. Most studies today seem to indicate that the multiplicity of factors involved in identifying an organizational system as ripe for teleconferencing makes each case unique and precludes the exogenous selection of a system.
gave a brief talk. Their papers ranged from the lessons learned in teleconferencing research to a look at operating systems in case study form. In addition, the upcoming technological breakthroughs for fully integrated teleconferencing systems were examined. As a result of the interaction between the panellists and with the audience, two areas of user interest were identified. First and foremost, the users expressed a need to ‘cost justify’ teleconferencing to their management. Because of the myth of travel substitution and the ‘softness’ of value-added measures such as increased productivity. they felt frustrated in their attempts to satisfy their management’s requirement. Further, many users in the audience were interested in the concept of signal compression and integration. Discussion of these topics was continued over lunch. It seemed clear that the cost justification issue must be addressed more carefully and hard data provided before some corporations would take a serious look at teleconferencing.
Case study experiences
For the second half of the final day. a series of panellists presented talks on a variety of subjects on communications satellites. As a transition speaker from the topic of teleconferencing to transmission via satellite, Richard Harkness of Satellite Business Systems gave an exceptional talk entitled ‘Planning issues in satellite teleconferencing’. One interesting point made by Harkness was that there is now a trend to rely more upon case study experiences than upon those experiences which have come exclusively from laboratory or field research. His comHands-on feel ments were almost an echo of For the remainder of the second day, Johansen’s earlier remarks regarding the attendees were given an oppor- the laboratory versus anecdotal evitunity to get a hands-on feel for four dence about ‘conflict’ modes of communication. He seemed to be saying different varieties of teleconferencing systems. Vendors were invited to pro- that, as with the evolution of any new technology, the ‘user laboratory’ previde mock-ups of audio teleconferencing, computer teleconferencing, slow- sents us with different results. In scan video, and full motion video tele- another point, regarding the marketing systems to organconferencing systems. In many cases of teleconferencing izations, Harkness pointed out the this was the first time that potential requirement for two presentations. users had seen any or all of these types. The third day was composed of two Management must first be sold on the basis of cost justification followed by a panels. Each of the morning panellists TELECOMMUNICATIONS
POLICY December 1981
Conferences/Letter
sale to the real users based on its potential to them. In making this point he provided the audience with some of the information they were seeking from the first panel. The remainder of the panel presentations and discussions ranged from teleconferencing to direct broadcast satellites to backyard earth stations. The emergence of the very large ad hoc video conferences now tying together
the resources of the Public Broadcast Service (PBS) and hotels as well as transportable earth stations were discussed by Elizabeth Young of the Public Satellite Service Consortium and James Black of VideoStar Connections, Inc. Elliot M. Gold, Editor, The Telespan Newsletter, Altadena, CA, USA
Letter to the editor US telecommunications
regulation
Manley R, Irwin and John D. Ela in their article ‘US telecommunications regulation: will technology decide?” argue that the deregulation of the telecommunications industry in the USA is justified by recent advances in telecommunications technology. While telecommunications deregulation may be prudent at the present time, the authors fail to support their argument adequately. This is primarily due to a misrepresentation of the original basis for telecommunications regulation. I intend here to discuss the traditionally held justifications for telecommunications regulation and to raise several questions concerning the impact of deregulation. Before discussing the traditional justifications for telecommunications regulation, it should be noted that the authors do not recognize the unique characteristics of the different telecommunications functions. They treat the functions of broadcasting (eg radio, television) and the functions of the common carriers (eg telephone, telegraph) in exactly the same fashion. This is important because the reasons for regulation of the broadcast functions differ substantially from the reasons for regulation of the common carriers. Telephone service is a good example of the common carrier function. A traditionally held basis for telephone regulation is that the industry is a natural monopoly. That is, the nature of the industry dictates high fixed costs and relatively lower variable costs which result in economies of scale leading to a monopoly. Secondly,
TELECOMMUNICATIONS
regulation was justified in order to prevent cut-throat competition and wasteful duplication and to protect customers from excessively high prices due to inelastic demand. Hence, the telephone case is one of price, or economic, regulation performed by the fifty state public utility commissions (PUCs) for local and intrastate service, and by the Federal Communications Commission (FCC) for interstate service. Traditionally, the broadcast functions have been regulated in order to ensure proper utilization of a limited resource (ie the electromagnetic spectrum). This regulation, which is performed by the FCC, is concerned with the problems of market entry (ie certification) and quality of service (eg programming).
Te&~~ological advances There is no doubt that technological advances have confused these distinctions. For example, the advent of cable television has changed the nature of television regulation from one of spectrum regulation to one of natural monopoly regulation. However, the authors do not make this distincton, nor do they show how technology has invalidated the original justifications for regulation. While technological advances may justify a consideration of reduced frequency separation of specific broadcast functions (eg the current proposal to reduce AM radio channels from 10 kHz to 9kHz), a continued regulation of spectrum allocation will
POLICY December 1981
to the editor
certainly be required. And, while common carrier services are becoming increasingly diversified and segmented, it is not clear that demand for ‘plain old telephone’ service is no longer inelastic. Prior to the implementation of deregulation policies. a number of specific questions will require careful consideration. Several of these questions are now enumerated using telephone service as an example. First, the deregulation of the telephone industry will influence a set of prevailing and expected social conditions. These conditions include low universal rates, near 100% penetration of telephone service and low uniform toll rates. Low rates and high penetration have been brought about by regulated crosssubsidies in the form of call averaging and toll settlements. While deregulation would allow marginal cost pricing, which would be economically efficient, there is no guarantee that these social conditions would continue. For example, studies by the Organization for the Protection and Advancement of Small Telephone Companies’ and the Rural Electrification Administration estimate an increase of between 116% and 211% in rural telephone service cost if local telephone service is deregulated. Additionally, there is no reason to suggest that in a deregulated environment companies would not engage in ‘cream skimming’ (ie companies entering the economically profitable markets without entering the economically marginal markets). Second, the authors do not address the deregulation impact on system reliability and integrity. For example, in the telephone case, the present system is essentially run by one company (ie AT&T and its affiliates). Additionally, AT&T’s established system standards tend to become the overall industry standard. In a deregulated environment, the total system would most probably consist of many companies at many different system levels. In such an environment, how will sufficient system capacity, proper system integration and proper system maintenance be ensured? Third, the authors ignore the fact that deregulation has begun and is
335
organizations can insure themselves against risks by other means. Several questions were asked by the audience about issues raised. For M Deweze wondered example, whether the user would be able to participate in the drawing up of his secret password-which M Barth was mainly opposed to (although this does actually occur in database utilization). M Berry pointed out that the validation problem also arises with regard to more traditional forms of telecommunications (eg recording telephone usage, invoice, etc). He also raised the question of the guarantees tha: are offered by the administrators of the telecommunications network (their responsibilities and obligations, etc). M Chamoux pointed out the high level of user protection guaranteed by the French post office, and stated that this aspect must not be neglected when electronic mail is in operation. In other areas new methods are being planned or applied (eg the Transpac agreement, and studies on Transfax).
Cool lawyers Professor Cathala was the final speaker, and put forward some of his thinking on the subject. He contrasted the coolness of lawyers with the excitement of technicians: since the start of the 19th century French law had, on the whole, known a high degree of stability, while technology had changed at a rapid pace. If law is well framed. then it can exist for a long time and take account of the invasion of new technologies. Is telematics going to pose problems on the scale of those which were caused by the development of cheques? After having briefly touched on the innovations brought by the legislation of 12 July 1980, notably the freedom of validation, he stated that in his view the real problems have not yet arisen, eg questions relating to the triangular (or even ‘quadrangular’) relationships involved, viz when one takes into account the eventual intervention of the commercial sector of the network, etc. It is essential to provide, for the new methods of payment, the same legal protections as those accorded the cheque. And it is certainly true. as M
to actLloret stated. that a kind of ‘legal General des Telcommunications vacuum’ exists, especially in the case of ively join in as such participation is certainly essential to a debate on telethe joint use of new and traditional matics. Yet the meetings which occur means of payment. It is important to recognize that the on occasions of this kind undoubtedly number of disputes has been very contribute to their success. small, which is reassuring. Indeed, it is Pierre Tornato, essential to be sparing in legislation. REST, because it is indeed the last resort - as Paris, France Carbonnier said, ‘The law is a necessary evil’. Those interested in obtaining the Despite the debate being somewhat documentation from this round table abstract at times. it stimulated interest should write to Pierre Tornato, lnstitut de Recherches Economiques et Sociales sur among a good number of the 2.50 par- les T6l&zommunication, 8 All&e des ticipants. It was unfortunate that there Blancs-Bouleaux, Fresnes, 94260 France. was no representative of the Directorat
Teleconferencing: a gathering of experts The Data Communications Conference on Teleconferencing and Satellite Communications Systems Technology, 24-26 June 1981, New York City
Even in an era of an abundance of conferences on teleconferencing and communications satellite systems, the Data Communications Conference on both subjects served as a tremendous attraction for the top talent in the field both as speakers and as attendees. Virtually every notable expert in the field of teleconferencing was in New York for this conference. It also attracted many current and potential users of teleconferencing. but few attendees were from countries other than the USA. Although the conference got off to a very poor start, due to the monopolization of the podium by the conference organizer. a great deal of new information was conveyed to the audience. The conference agenda was split almost down the middle between teleconferencing and satellite communications. The first day was to be dedicated to the topic of teleconferencing. The opening remarks, although introduced to be about teleconferencing and thought to be factual, turned out to be neither. Instead, a great deal of interesting information regarding the trends in telecommunications along with the potential impact of the right and left hemispheres of the human brain served as a backdrop upon which occasional
TELECOMMUNICATIONSPOLICYDecember 1981
related bits of information about teleconferencing were put forth. Much of the material used was quite old or in some cases only marginally factual. By the morning’s end the audience was noticeably restless and was anticipating the afternoon’s remarks. to be delivered by Martin Elton and Robert Johansen. The afternoon remarks were a great improvement over those of the morning session. Through the use of a dialogue technique first tried over a teleconference at last year’s Red Bank ‘Human Factors in Telecommunications’ symposium, Elton and Johansen limited their topics of discussion to a set of major points each relying upon the other for interaction over the points, to reveal subtleties not initially discussed. Johansen’s points were buttressed by visuals and anecdotes collected recently from teleconferencing systems. His first point was that ‘The culture of the [teleconferencing] system has to be compatible with that of the users’. In support of all this, Johansen showed 35 mm slides illustrating a series of teleconferencing rooms in North America. As each slide was shown he asked the audience to identify the type of individual whose culture this room might
333
Conferences
match. In one of the most illustrative, the room of a well known engineering firm was shown: this seemed to be very bare, with loose wires plainly in view. The reasons for the classic failure of the MRC-TV system in New York were shown when the slide of that room illustrated a dramatic disparity between the culture of the room and the culture of the group selected to use it. Another point raised by Johansen and discussed by himself and Elton was that although leadership skills are very important, they are different in a teleconference from the skills required in a face-to-face discussion. In an interesting departure, Johansen suggested that, contrary to the research literature, conflict-intensive communication could actually be conducted during a teleconference. According to Johansen, ‘encouraging good fights is tricky, as is avoiding bad fights’. His point was that even though the literature suggests that persuasion, negotiation and bargaining cannot be conducted effectively in a mediated meeting, the anecdotes emerging from the regular use of teleconferencing today suggest that they can and are.
Sound and vision The major points raised by Martin Elton included some which are well documented in the research literature. For example, he reiterated the fact that teleconferencing is still not a proven substitute for travel, even though major corporations today believe it to be. Through the use of a pun he reiterated the requirement for highquality audio in a teleconference: ‘There’s more to teleconferencing than meets the eye’. Both Elton and Johansen discussed the fact that there are a variety of teleconferencing systems that can be used and that one of the problems today is the misuse of the term. Today, it seems that many of those who are new to the field feel that teleconferencing implies telephone or audio-only teleconferencing and that this is somehow different conceptually from video conferencing (by which they mean full motion video teleconferencing). Johansen and Elton prefer the use of teleconferencing as a generic term, meaning interactive group com-
334
munications through an electronic medium. The Data Communications Conference was a three-day conference. On the second day, after a brief overview of satellite communications systems, the presentation shifted back to teleconferencing. John Malone, a relatively unknown figure in the field of teleconferencing gave a very good presentation on the implementation of teleconferencing in an industrial setting. Malone is President of the Eastern Management Group, a management consulting firm headquartered in New Jersey. His paper was based on a presentation made at the 1980 Teleconferencing and Interactive Media Conference held at the University of Wisconsin-Extension. He laid out a series of steps to be followed in introducing teleconferencing to a corporation. After identifying the three-target organizational divisions within a corporation as manufacturing. marketing, and general management, Malone attempted to identify manufacturing as the one most ripe for the application of teleconferencing. Although presented logically. his conclusion is not supported by the work of others in the field, who feel that one can only identify an organizational division as ripe for the application of teleconferencing by looking at each corporation on an ad hoc basis. Most studies today seem to indicate that the multiplicity of factors involved in identifying an organizational system as ripe for teleconferencing makes each case unique and precludes the exogenous selection of a system.
gave a brief talk. Their papers ranged from the lessons learned in teleconferencing research to a look at operating systems in case study form. In addition, the upcoming technological breakthroughs for fully integrated teleconferencing systems were examined. As a result of the interaction between the panellists and with the audience, two areas of user interest were identified. First and foremost, the users expressed a need to ‘cost justify’ teleconferencing to their management. Because of the myth of travel substitution and the ‘softness’ of value-added measures such as increased productivity. they felt frustrated in their attempts to satisfy their management’s requirement. Further, many users in the audience were interested in the concept of signal compression and integration. Discussion of these topics was continued over lunch. It seemed clear that the cost justification issue must be addressed more carefully and hard data provided before some corporations would take a serious look at teleconferencing.
Case study experiences
For the second half of the final day. a series of panellists presented talks on a variety of subjects on communications satellites. As a transition speaker from the topic of teleconferencing to transmission via satellite, Richard Harkness of Satellite Business Systems gave an exceptional talk entitled ‘Planning issues in satellite teleconferencing’. One interesting point made by Harkness was that there is now a trend to rely more upon case study experiences than upon those experiences which have come exclusively from laboratory or field research. His comHands-on feel ments were almost an echo of For the remainder of the second day, Johansen’s earlier remarks regarding the attendees were given an oppor- the laboratory versus anecdotal evitunity to get a hands-on feel for four dence about ‘conflict’ modes of communication. He seemed to be saying different varieties of teleconferencing systems. Vendors were invited to pro- that, as with the evolution of any new technology, the ‘user laboratory’ previde mock-ups of audio teleconferencing, computer teleconferencing, slow- sents us with different results. In scan video, and full motion video tele- another point, regarding the marketing systems to organconferencing systems. In many cases of teleconferencing izations, Harkness pointed out the this was the first time that potential requirement for two presentations. users had seen any or all of these types. The third day was composed of two Management must first be sold on the basis of cost justification followed by a panels. Each of the morning panellists TELECOMMUNICATIONS
POLICY December 1981
Conferences/Letter
sale to the real users based on its potential to them. In making this point he provided the audience with some of the information they were seeking from the first panel. The remainder of the panel presentations and discussions ranged from teleconferencing to direct broadcast satellites to backyard earth stations. The emergence of the very large ad hoc video conferences now tying together
the resources of the Public Broadcast Service (PBS) and hotels as well as transportable earth stations were discussed by Elizabeth Young of the Public Satellite Service Consortium and James Black of VideoStar Connections, Inc. Elliot M. Gold, Editor, The Telespan Newsletter, Altadena, CA, USA
Letter to the editor US telecommunications
regulation
Manley R, Irwin and John D. Ela in their article ‘US telecommunications regulation: will technology decide?” argue that the deregulation of the telecommunications industry in the USA is justified by recent advances in telecommunications technology. While telecommunications deregulation may be prudent at the present time, the authors fail to support their argument adequately. This is primarily due to a misrepresentation of the original basis for telecommunications regulation. I intend here to discuss the traditionally held justifications for telecommunications regulation and to raise several questions concerning the impact of deregulation. Before discussing the traditional justifications for telecommunications regulation, it should be noted that the authors do not recognize the unique characteristics of the different telecommunications functions. They treat the functions of broadcasting (eg radio, television) and the functions of the common carriers (eg telephone, telegraph) in exactly the same fashion. This is important because the reasons for regulation of the broadcast functions differ substantially from the reasons for regulation of the common carriers. Telephone service is a good example of the common carrier function. A traditionally held basis for telephone regulation is that the industry is a natural monopoly. That is, the nature of the industry dictates high fixed costs and relatively lower variable costs which result in economies of scale leading to a monopoly. Secondly,
TELECOMMUNICATIONS
regulation was justified in order to prevent cut-throat competition and wasteful duplication and to protect customers from excessively high prices due to inelastic demand. Hence, the telephone case is one of price, or economic, regulation performed by the fifty state public utility commissions (PUCs) for local and intrastate service, and by the Federal Communications Commission (FCC) for interstate service. Traditionally, the broadcast functions have been regulated in order to ensure proper utilization of a limited resource (ie the electromagnetic spectrum). This regulation, which is performed by the FCC, is concerned with the problems of market entry (ie certification) and quality of service (eg programming).
Te&~~ological advances There is no doubt that technological advances have confused these distinctions. For example, the advent of cable television has changed the nature of television regulation from one of spectrum regulation to one of natural monopoly regulation. However, the authors do not make this distincton, nor do they show how technology has invalidated the original justifications for regulation. While technological advances may justify a consideration of reduced frequency separation of specific broadcast functions (eg the current proposal to reduce AM radio channels from 10 kHz to 9kHz), a continued regulation of spectrum allocation will
POLICY December 1981
to the editor
certainly be required. And, while common carrier services are becoming increasingly diversified and segmented, it is not clear that demand for ‘plain old telephone’ service is no longer inelastic. Prior to the implementation of deregulation policies. a number of specific questions will require careful consideration. Several of these questions are now enumerated using telephone service as an example. First, the deregulation of the telephone industry will influence a set of prevailing and expected social conditions. These conditions include low universal rates, near 100% penetration of telephone service and low uniform toll rates. Low rates and high penetration have been brought about by regulated crosssubsidies in the form of call averaging and toll settlements. While deregulation would allow marginal cost pricing, which would be economically efficient, there is no guarantee that these social conditions would continue. For example, studies by the Organization for the Protection and Advancement of Small Telephone Companies’ and the Rural Electrification Administration estimate an increase of between 116% and 211% in rural telephone service cost if local telephone service is deregulated. Additionally, there is no reason to suggest that in a deregulated environment companies would not engage in ‘cream skimming’ (ie companies entering the economically profitable markets without entering the economically marginal markets). Second, the authors do not address the deregulation impact on system reliability and integrity. For example, in the telephone case, the present system is essentially run by one company (ie AT&T and its affiliates). Additionally, AT&T’s established system standards tend to become the overall industry standard. In a deregulated environment, the total system would most probably consist of many companies at many different system levels. In such an environment, how will sufficient system capacity, proper system integration and proper system maintenance be ensured? Third, the authors ignore the fact that deregulation has begun and is
335