Keep Cutting Telephone Rates

Last week the Harvard Student Telephone Office (HSTO) announced that, as of November 19, international telephone rates will decrease by as much as 20 percent. These much-needed reductions were made possible through negotiations with MCI and changes in HSTO operations, including the elimination of all profits for the next two years on student telephone usage.

We applaud the efforts of the HSTO to lower rates for international calls by reducing its profits and finding efficiencies in its operations. The many international students at Harvard will no doubt see their telephone bills drop dramatically after November 19.

However, in retrospect, these changes should have come about much sooner. After all, the only possible economic rationale behind HSTO's monopoly on student telephone usage is that it is a natural monopoly. A natural monopoly, by its very definition, should be able to meet the demands of the market at lower cost than if it were broken up into smaller, competitive firms. With proper regulation, the natural monopoly should pass the benefits of these lower-than-average costs on to the consumer.

In HSTO's case, the bargaining power it derives from the thousands of customers it represents should translate into lower-than-average costs for providing long-distance service. These lower-than-average costs should consequently translate into lower telephone rates for students than if they had the right to choose their own long-distance carrier.

Yet even HSTO admits that prior to the recent rate reduction, its international rates were not competitive for some countries in comparison to other long-distance carriers. Further, domestic long-distance rates remain high. Clearly, HSTO must do more to pass on the benefits of its natural monopoly to students.


Accordingly, we urge HSTO to negotiate more aggressively with MCI and other long-distance carriers in order to achieve the lowest possible telephone rates for Harvard students. On top of this, HSTO should continue to streamline its internal operations so telephone rates can be further reduced. The students of Harvard have surrendered their right to choose their own long-distance carrier. In return, we deserve competitive long-distance telephone rates across the board.