Auctions for universal service obligations
This paper proposes the use of auctions for determining which carriers should undertake a universal service obligation, and what compensation they should receive for performing this function. From the regulator's perspective the auction would reveal carriers valuations of the USO, determine the number of USO providers endogenously, and provide an alternative to traditional cost-of-service regulation. Since bidding is a voluntary action by the firms, auctions would serve also to discipline the regulator. While auctions are compatible with competitive local service markets, they can also serve as a transition to competitive markets.
auction competition universal service obligations (usos) competitive bidding