Hazlett Research Cited in Supporting Reverse Auction Competition for Telecom Carriers

The FCC's recent efforts to seek comment on reverse-auction competitive bidding as a method of achieving a less costly subsidy system for telecom services to rural areas is an important step forward, according to top managers of Washington, D.C., think tank the Progress & Freedom Foundation, citing research by Professor Thomas Hazlett on universal service telephone subsidies.

Think tank: USF 'Reverse Auction' Asks the Right Questions, Telecom Policy Report, August 21, 2006.

"'Phone carriers compete to become the 'provider of last resort' in areas where regulators deem local services (without subsidies) insufficient, bidding a price (paid by the government) to supply such services,' Hazlett says in his TSC-sponsored work. 'Firms should be free to adopt any technology or network architecture, promoting innovation, and the effect of rivalry would push subsidy levels down to the actual cost of service, saving taxpayers billions of dollars. The extreme inefficiency of the the existing universal-service system makes it relatively easy to devise reforms that achieve generous social benefits. Policies to deliver these savings are the superior alternative to tax increases and would be welcomed by the millions of users of U.S. telecom networks.'"