Preliminary: Do Not Cite without Permission

JEL codes: L51, L96 I examine the effects of FCC regulation on the innovation and introduction of advanced telecommunications services in the U.S. An interim of lighter regulation provides an “experiment” to test the regulatory regime’s impact on innovation. The econometric model comprises an arrival process (for service innovation) followed by a duration process (for regulatory delay). The number of services the firms created during the interim is 60—99% higher than the model predicts they would have created if the stricter regulation had still been in place. Overall, firms would have introduced 62% more services to consumers during the study period if the regulation had not been in place. PRELIMINARY: DO NOT CITE WITHOUT PERMISSION ∗This work is based on chapter 5 of my dissertation (Prieger, 1999). I acknowledge the support of many people at Ameritech, LECG, Inc., and the University of California, Berkeley, without which this study would not have been possible. At Ameritech, I thank in particular Ken Dunmore and Larry Strickling (now at the FCC). At UC Berkeley, I thank my dissertation advisor Richard Gilbert and others. Early parts of the project received financial support from Ameritech through LECG; all opinions and errors are my own.