Scott Wallsten

An Econometric Analysis of Telecom Competition, Privatization, and Regulation in Africa and Latin America

This paper explores the effects of privatization, competition, and regulation on telecommunications performance in 30 African and Latin American countries from 1984 through 1997. Fixed-effects regressions reveal that competition--measured by mobile operators not owned by the incumbent--is correlated with increases in the per capita number of mainlines, payphones, and connection capacity, and with decreases in the price of local calls. Privatization combined with an independent regulator is positively correlated with telecom performance measures. Privatization alone, however, is associated with few benefits, and is negatively correlated with connection capacity. Copyright 2001 by Blackwell Publishing Ltd

An empirical test of geographic knowledge spillovers using geographic information systems and firm-level data

Abstract Most research on economic geography focuses on large geographic areas, such as nations and states. I use a geographic information system and a firm-level dataset to explore agglomeration and spillovers at the firm level over discrete distances. I calculate the distance between each firm-pair to explore co-location, and use these calculations to devise a test of spillovers: is participation in the Small Business Innovation Research (SBIR) program, which provides R&D grants to small firms, a function of whether nearby firms win SBIR grants? I find that the number of other SBIR firms within a fraction of a mile predicts whether a firm wins awards, even controlling for regional, firm, and industry characteristics.

Public or Private Drinking Water? The Effects of Ownership and Benchmark Competition on U.S. Water System Regulatory Compliance and Household Water Expenditures

Whether water systems should be owned and operated by governments or private firms is intensely controversial, and little empirical research sheds light on the issue. In this paper we use a panel dataset that includes every community water system in the U.S. from 1997-2003 to test the effects of ownership and benchmark competition on regulatory compliance and household water expenditures. We find that when controlling for water source, location fixed effects, county income, urbanization, and year, there is little difference between public and private systems. Public systems are somewhat more likely to violate the maximum levels of health-based contaminants allowed under the Safe Drinking Water Act (SDWA), while private systems are somewhat more likely to violate monitoring and reporting regulations. The results are reversed for systems that serve more than 100,000 people. Household expenditures on water at the county level decrease slightly as the share of private ownership increases, contradicting fears that private ownership brings higher prices. While direct competition among piped water systems is practically nonexistent, we find that benchmark competition among water systems within counties is associated with fewer SDWA violations and, when combined with private ownership, lower household expenditures. Overall, the results suggest that absent competition, whether water systems are owned by private firms or governments may, on average, simply not matter much.

Telecommunications investment and traffic in developing countries: The effects of international settlement rate reforms

In 1997 the FCC ordered sharp decreases in international settlement rates (bilaterally negotiated telecommunication rates) between the U.S. and other countries. Developing countries, which received about

Reverse Auctions and Universal Telecommunications Service: Lessons from Global Experience

35 billion in net settlement payments from U.S. carriers between 1985 and 1998, claim that payments finance telecom investment and that reduced rates, and therefore payments, will harm investment. Using a panel dataset of 179 countries from 1985–1998, I find settlement rates negatively correlated with international telecom traffic, suggesting that reduced rates will stimulate traffic. I also find no evidence that payments finance investment as measured by telephone penetration and telecommunications equipment imports.

Understanding International Broadband Comparisons 2009 Update

The United States now spends around

Measuring the Effectiveness of the Broadband Stimulus Plan

7 billion on universal service programs-subsidies intended to ensure that the entire country has access to telecommunications services. Most of this money supports telecommunications service in high cost (primarily rural) areas, and the High Cost fund is growing quickly. In response to this growth, policymakers are considering using reverse auctions, or bids for the minimum subsidy, as a way to reduce expenditures. While the U.S. has not yet distributed funds for universal service programs using reverse auctions, the method has been used widely. First, reverse auctions are akin to standard government procurement procedures, which call for firms to bid on government contracts to keep prices down. Sending contracts out for bid is common in both simple and complex government contracting. Second, many countries around the world have used reverse auctions for distributing universal funds. This paper reviews global experiences with reverse auctions and discusses their implications for the U.S. In particular, I review reverse auctions in Australia, Chile, Colombia, India, Nepal, and Peru. Not all of the auctions were successful, but they clearly demonstrate that reverse auctions can be an effective tool for revealing information about the true cost of providing universal coverage and for reducing expenditures on subsidies.

The Economic Cost of the Iraq War

This paper updates my May 2008 analysis of cross-country broadband data where new information is available. Household broadband adoption continues to increase quickly in all OECD countries. U.S. household broadband penetration increased from 47 percent in March 2007 to 63 percent in April 2009, meaning the U.S. ranks somewhere between 8th and 10th in household broadband penetration among OECD countries. If current trends continue, the U.S. and nearly all wealthy OECD countries will reach a saturation point within the next few years. Speeds continue to increase around the world. Four OECD countries — Korea, Japan, Sweden, and the Netherlands at 18, 15, 12, and 9.4 mbps — had average download speeds well above others in the first quarter of 2009. Another 12 countries had average download speeds between 6 and 8 mbps, including the U.S. with an average of 6.4 mbps. Though the U.S. has, on average, slower download speeds than some other countries, consumers in the U.S. download far more movies and music per capita via the Internet than do consumers in the U.K, France, Germany, Italy, Canada, or Japan (the only countries considered in a recent Ofcom study), suggesting that these speeds are not seriously hindering growth in online video. In terms of prices, the U.S. appears to have among the least expensive low-end broadband plans but among the more expensive high-end plans. More broadly, the U.S. remains at or near the top of many other ICT indicators including the latest estimates of IT investment.

What Affects the Quality of Economic Analysis for Life-Saving Investments?

The newly enacted economic stimulus package includes

The Educational Impact of Broadband Subsidies for Schools Under E-Rate

7.2 billion to bring broadband to rural areas lacking high-speed Internet services: lets not spend the money without testing its effectiveness, says Scott Wallsten.