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Contradictions in Telecom Regulation

August 24, 2007 - 0 Comments

ASPEN, CO — Every August, legions of telecom policy lawyers and analysts escape the heat of Washington summer to trek to Aspen for a series of seminars and meetings organized by the Aspen Institute and the Progress and Freedom Foundation. The high altitude leads to some high level discussions on telecom policy, both on and off the record.My reaction to this year’s mountain voyage is that the trends in telecom regulation are tied up in serious contradictions. Expert after expert pointed out what we have all seen in that marketplace — consumers are getting more services, from more providers at lower costs. Broadband services are increasing in speed and penetration. Cable companies are taking significant market share through digital VoIP offerings. Telephone companies are beginning serious competition in the cable TV market. The wireless industry remains fiercely competitive, with almost all Americans having a choice of 3 or more wireless providers. The price of wireless service continues to drop and American consumers use more minutes of wireless than any other country (save Hong Kong).It sounded as though the FCC’s policy of deregulation and competition is successful. But that was not the reaction of many advocates. Calls for increasing regulation sounded from many sides of the debate. Wireless competition is not sufficient so we need strict rules on spectrum auctions to “create more competition.” Broadband access needs to be regulated to create a “neutral Internet,” regardless of whether there is an actual problem to address or not. Cable equipment security must be regulated, at great consumer cost, in order to create a “retail” equipment market. I couldn’t help but be struck by the obvious contradiction. Greater competition, lower prices, and better services should lead to less, not more, regulation. What we need is more fact-based policy, not regulation based on unlikely and unrealistic conjecture. And the fact is that the deregulatory policies adopted over the years for the Internet, wireless, and broadband access world have been successful at incenting investment and innovation.

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