Georgia's Unfinished Telecom Agenda

Regulatory Reform Would Grow Georgia's Economy
Hance Haney, George Gilder
Discovery Institute
January 8, 2010
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The time has come to update Georgia's telecommunications laws to reflect enormous changes in the marketplace, promote greater competition and choice for consumers and grow the state's economy, we conclude in a report issued today entitled "Georgia's Unfinished Telecom Agenda: Regulatory Reform Would Grow Georgia's Economy."

Telecommunications has become one of the most competitive arenas in the global economy.  Today, cable phone service is available to over 100 million homes nationally.  Comcast, a cable provider, is also the nation's third largest provider of telephone service.

And over one-third of the nation’s households had only wireless phones or received all or almost all calls on wireless phones despite having a landline phone in the home.

The availability of cable phone service, wireless and other competitive offerings for the vast majority of consumers means that most consumers are now “virtual regulators” who can switch providers if they are dissatisfied with the price or quality of service they are currently receiving.

Continued reliance on utility regulation is not only unnecessary but will harm consumers by distorting competition and threatening much-needed investment in broadband.

Policymakers should undertake regulatory reform as soon as possible so landline service providers can offer more competitive services and maintain stock valuations necessary to attract sufficient investment capital for broadband expansion. Investors won’t back broadband if they perceive it could be forced to subsidize local services which are unprofitable due to over-regulation.

Legacy utility regulation threatens new technological opportunities and economic efficiencies which, according to others, promise a direct economic stimulus of at least $3.3 billion in Georgia over the next five years in the form of lower prices for voice services, plus an additional $3.9 billion in economic impact annually from increased broadband availability and use – including over 70,000 new jobs per year.

The following reforms are recommended:

  • Allow pricing freedom so incumbents can compete.
  • Reduce inflated intrastate access charges for smaller rural providers and new entrants at least to the same level as interstate access charges.
  • Eliminate filing requirements which ensure rivals receive detailed information about a competitor’s new or improved services or products.
  • Eliminate utility commission jurisdiction for numerous consumer issues – many of which are antiquated as a result of changes in technology – which is redundant and leads to inconsistent enforcement with anticompetitive effects.
  • Terminate obligations to serve, which impose costs on some providers but not others and are anticompetitive wherever consumers can choose between multiple providers.

These proposals all rest on the principle that all providers of voice services should be subject to minimum regulation which does not discriminate on the basis of technology or history, just like in any competitive market.

These reforms aren’t novel or unprecedented.  In the Southeast region alone, these reforms have already been adopted in Alabama – and other neighboring states are moving in the same direction.

By simple reforms of outmoded laws, Georgia can ignite a new spiral of innovation and revival based on new technologies and services tapping into new worldwide webs of glass and light and air.

Full Report (PDF)