WMU News

Economists publish book on telecommunications deregulation

June 16, 1998

KALAMAZOO -- A book that details Michigan's leadership in the deregulation of the telecommunications industry has been published by two Western Michigan University economists.

Dr. Werner Sichel, chairperson of the Department of Economics, and Dr. Donald L. Alexander, associate professor of economics, are the authors of "Promoting Competition in Michigan Telecommunication Markets through Innovative Legislation."

"This book describes how Michigan legislators, regulators, industry participants and consumers initiated and shaped significant legislative changes that, in many ways, placed Michigan at the forefront of states seeking to facilitate greater competition in their telecommunication markets," Sichel says.

The book is an outgrowth of a 1993 study Sichel and Alexander were requested to conduct by Ameritech. The company asked them to provide telecommunications industry executives with information about the effect of the legislation. The volume begins with an essay written by the two authors focusing on the notable economic changes that were part of the deregulation legislation.

Beginning in 1986 with Public Act 305, Michigan has been among the leaders in changing how states regulate the telecommunications industry to keep pace with technological innovations like fiber-optic cable, wireless communication services and digital transmission signals. This initial legislation gave the Michigan Public Service Commission considerable discretion over regulation and deregulation of telecommunications services, according to the authors.

A second piece of legislation, Public Act 179, was passed by the state Legislature in 1991. Its goal was to promote competition in the provision of local exchange and access service by reducing the cost to a firm entering the business. It also was intended to promote competition of intrastate interexchange service by allowing market forces to determine rates.

The Michigan Telecommunications Act of 1995, also known as Public Act 216, added provisions such as required unbundling and the establishment of just and reasonable prices for interconnection that facilitate the entry of new service providers. As a result, consumers rely even less on government regulation and more on competition in telecommunications markets, the authors say.

All three pieces of legislation, along with selected background information on each, are included in the book.

"We thought that it would be good to have a record of the important Michigan legislation and the background for that legislation, which was a forerunner of national legislation in this very important area," Alexander says. "There really hadn't been a single source previous to this book where one could get that history and understand the relationship between what Michigan did and what was done nationally."

The book also contains a copy of the Telecommunications Act of 1996, the landmark federal legislation that many observers say was patterned after Michigan telecommunications legislation.

"Michigan had vision," Sichel says. "There was an understanding of the importance of competition, that there had been substantial technological change which allowed for competition and that the industry, therefore, needed a lot less regulation."

The book also features an essay by a leader in the passage of the Michigan legislation. State Sen. Dick Posthumus of Alto provides a commentary on the political forces at work during the legislative debates.

The 386-page softcover book is intended for use by professionals and practitioners in telecommunications in Michigan as well as across the country. It was published by the Institute of Public Utilities and Network Industries of the Eli Broad Graduate School of Management at Michigan State University.

A WMU faculty member since 1960, Sichel holds his bachelor's degree from New York University and his master's and doctoral degrees from Northwestern University. Alexander has been on the WMU faculty since 1991; he earned his bachelor's degree from Bowling Green State University and his doctoral degree from Pennsylvania State University.

Media contact: Ruth Stevens; ruth.stevens@wmich.edu

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