m, entrants do not have to invest in their own facilities. See chapters 4 and 5 for further details. 18. U.S. Bureau of the Census, Current Population Survey, as reported in FCC, Refer- ence Book of Rates, Price Indices and Household Expenditures for Telephone Service (July 2004), table 2-1. 19. Ibid. 20. The data in table 3-2 exclude household spending on Internet services provided by Internet service providers (ISPs) and cable television companies. 21. For a review of the literature, see Robert W. Crandall and Leonard Waverman, Who Pays for Universal Service? When Telephone Subsidies Become Transparent (Brookings, 2000), Notes to Pages 26-31 chap. 5; and Lester D. Taylor, Telecommunications Demand in Theory and Practice (Hing- ham, Mass.: Kluwer, 1994). 22. See Taylor, Telecommunications Demand. 23. Data on interstate and international service appear in FCC, Telecommunications Industry Revenues, 2002, table 9. Between 1995 and 2002, the nominal price per minute fell from 16 cents to 9 cents. For intrastate details, see Bureau of Labor Statistics, Consumer Price Index, All Urban Households, "Land-line intrastate toll calls," accessible at www.bls. gov/cpi/home.htm (February 2005). 24. The FCC's annual Telecommunications Industry Revenues reports show that the share of Bell company revenues accounted for by interstate and international revenues rose from about 16 percent in 2000 to 20 percent in 2002. There was also a large shift to wireless call- ing, but much of this was at off-peak prices, which were often zero. 25. The 1996 act's major impact on wireless fell on interconnection rates. The act requires local carriers to pay "reciprocal compensation" for terminating each other's calls. These rates are established through the arbitration-regulation process that guides all local interconnection, and they are generally set at about 0.5 to 0.7 cents a minute. Deemed "local" carriers for this purpose, wireless carriers are therefore subject to similar, low interconnection charges. 26. California is currently trying 