competitive marketplace

More on Waxman and Tech

by Ryan Radia on November 20, 2008

in Tech & Telecom

As Cord mentioned earlier, Henry Waxman has been named incoming Chairman of the House Energy and Commerce Committee, of which the Subcommittee on Telecommunications and the Internet is a part. In his role, Waxman is likely to play an influential role in future tech policy fights involving issues such as universal broadband access and network neutrality. While Waxman has laudably defended civil liberties on many occasions, his record on telecommunications lawmaking is quite troubling.

Waxman has embraced forced openness for privately-owned networks, even threatening to cut off USF funding for telecom companies unwilling to open up their networks for device roaming. Though the USF itself is unneeded, and in some cases even counter-productive (as Cord argues), any government subsidies of rural telecommunications services should strive to minimize costs rather than reshape markets to suit political whims. Because mandatory access is often at odds with the bottom line, demanding that carriers grant access to any device often leads to a reduction in infrastructure investment. America’s rural areas would be better served by a competitive marketplace in which companies are free to experiment with all kinds of pricing plans and service offerings to suit evolving consumer demands.

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FCC Might Actually Roll Back an Outdated Regulation!

by Ryan Radia on October 15, 2008 · 1 comment

in Tech & Telecom

If you wanted to communicate over long distances in real-time 25 years ago, you had little choice but to rely on your local phone company for carriage. Email and mobile phones were still oddities, and neither SMS text messages nor tweets had even been conceived.

Federal regulators, concerned that some companies might not maintain a  high level of service, imposed reporting requirements so the FCC could monitor phone companies and ensure calls were being handled properly.

Fast forward to 2008, and the traditional phone company is but one of numerous firms providing voice and data services to consumers. From cable digital voice to cell phones to free, IP-based applications like Skype, there are a growing number of ways to talk to people in another part of the country. Yet federal regulators have continued enforcing strict reporting requirements on phone companies, forcing these firms to spend countless man-hours filling out forms that some Washington bureaucrat may one day glance over. And these FCC rules apply exclusively to phone companies, putting them at an unfair advantage simply because they happen to be older and more well-established.

As we’ve discussed many times before, the FCC’s paperwork-intensive service quality reporting rules impose millions of dollars in compliance costs on phone companies. These costs are passed on to customers, resulting in higher prices without any actual benefit.

The FCC’s service quality reporting requirements needlessly duplicate the function of a competitive marketplace. How could a phone company get away with subpar service without losing customers to superior competitors? Market discipline-not federal regulation-is ultimately what pushes telecom firms strive for high quality service.

Fortunately, in a notice published today in the Federal Register, the FCC describes its plans to provide regulatory relief to AT&T and Verizon, among others. This needed reform will help reduce unneeded regulations, possibly translating into more competitive offerings from telephone companies.

Of course, the Federal Register is loaded with myriad regulations that, collectively, cost Americans well over $1 trillion dollars per year (as CEI catalogues in its annual publication, Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State). The FCC’s decision to relieve telcos of reporting rules is a welcome move, but we have a long way to go before the regulatory leviathan is in check.