Lawrence Kotlikoff believes that he has found the formula for a Just Price for local telephone service.
TELRIC (Total Element Long Run Incremental Cost). TELRIC is the Supreme Court-approved methodology used by state regulators to determine leasing rates for Bell facilities. If the FCC TELRIC review forces state regulators to increase leasing rates, local voice competition will be history.
In my view, the idea of treating the local phone wires as a regulated resource to be re-sold by anyone who wants to set up a billing service is not helpful. It may be a bonanza for lawyers, but not for the public.
If you hate the local phone companies, then you should be rooting for them to be wiped out by wireless Internet, voice-over-IP, and other innovations. My prediction is that if we implement regulated competition in local phone service the way that Kotlikoff and others propose, then we will end up bailing out the Baby Bells, rather than leaving them to the fate of market forces.
