ECO 436 Industry Seminar

1
ECO 436 Industry Seminar

• Dr. David G. Loomis
• Illinois State University
• 309-438-7979

2
Market Structure Today

• Key to understanding market structure is LATAs
• LATA - Local Access and Transport areas -
  created at the divestiture of ATT, these are
  areas that the RBOCs are precluded from operating
  outside of. (map of IL LATAs)

3
Types of Calls

• Local calls - defined by company regulated by
  state commission
• Intra-LATA calls - "toll" calls - calls that
  originate and terminate within the same LATA.
  Usually defaults to the local telephone company.
  Some states allow competition. Regulated by state
  regulatory commissions.
• InterLATA intrastate calls - calls that originate
  and terminate in different LATAs but are still
  within the same state. Regulated by state
  regulatory commissions.

4
Types of Calls

• InterLATA interstate calls - calls that originate
  and terminate in different LATAs and states.
  Regulated by the FCC.
• Local telcos provide access to the local network
  to IXCs for interLATA calls. This is called
  "switched access". Access for intrastate switched
  access is regulated by state interstate is
  regulated by FCC.

5
(No Transcript)
6
Company types Local Exchange Companies (LECs)

• 7 RBOCS - NYNEX Bell Atlantic, Bell South, SBC
  (formerly Southwestern Bell), Ameritech, US West,
  Pacific Telesis.
• In 1982, 25 Bell Operating companies served 81
  of the phone lines but only 41 of the assigned
  geographic territory in the U.S. (Brock p. 65)
• Large "independents" - GTE, Sprint Local
  (Centel), SNET, thousands of small independents
• A total of 1,432 independent telcos served
  the remaining 59 of the territory but provided
  only 19 of the telephone lines. (Brock p. 65)

7
Company types - Interexchange carriers (IXCs)

• Traditional Long Distance Carriers - ATT
  MCI/Worldcom, Sprint, Qwest, and thousands of
  resellers.

8
Market Share of IXCs (WSJ, A3, 9/27/99)
9
Company types

• CAPs Competitive Access Providers
• ALTs Alternate Local Transport companies
• CLECs Competitive Local Exchange Companies
• Started by supplying high-speed data and voice in
  local market to large business
• MFS, Teleport, Eastern Telelogic

10
Industry Fragmentation
11
Regulation and History

• Communications Act of 1934
• FCC vs. States
• Increasing Entry
• Divestiture
• LD competition
• Local Competition