Customer Ownership of the Local Loop: A Solution to the Problem of Interconnection

Interconnection is necessary for competition in telephony, but interconnection agreements are difficult to negotiate. With local service competition, entrants usually cannot duplicate the local loop, so interconnection also involves “renting” the incumbent’s local loops. An incumbent may object to being asked to permit use of its infrastructure by its competitors, in order to allow its competitors to compete with it. If customers own their local loops, however, the problems of interconnection virtually disappear: customers will determine whose traffic their loops carry, and incumbents will not have to supply competitors with the means of competing with them. Running Title: Customer Ownership of the Local Loop Acknowledgements: I thank Jim Alleman, Dale Hatfield, Sandy McCray and Vince Snowberger for helpful comments on earlier versions of this paper.