Telecommunications

Would Ronald Reagan have supported net neutrality? A Republican congressman tried to infer it is consistent with the Reagan legacy because, after all, His Justice Deptartment prosecuted AT&T. Let’s set the record straight: Reagan opposed the breakup of AT&T. He reluctantly allowed it to proceed under pressure from zealots at the Antitrust Division. Reagan’s personal views are well documented. See, e.g., “Reagan: In His Own Hand,” by Kiron K. Skinner, Annelise Anderson and Martin Anderson (eds.) at 316-17. It includes the following transcript of a 1979 radio address by Ronald Reagan: “I hear the govt. is going to or already has sued the phone company again. It makes you wonder how they have the nerve…. “What with busy signals, wrong Read More ›

House Energy & Commerce Chairman Joe Barton (R-TX), Ranking Member John Dingell (D-MI) and others worked hard to get a broad bipartisan agreement on telecom reform. That effort failed over some absurd demands of greedy local officials, high tech companies and “consumer advocates” who act as if telecom and cable vendors are nonprofit agencies. Such expectations are hardly surprising, since telecom and cable vendors basically require government approval to innovate their services. A new proposal bearing the imprimatur of three Republicans — Chairman Barton, Rep. Fred Upton (R-MI) and Rep. Chip Pickering (R-MS) — as well as Rep. Bobby Rush (D-IL) provides some welcome middle ground. Any provider of video services could obtain a national franchise that would be subject Read More ›

The Economic Strategy Institute’s new report, “America’s Technology Future At Risk,” should be required reading. Some of the recommendations are better than others, but the following is one of the best summaries of where we have been and where we ought to go: “The U.S. telecommunications markets should be deregulated to the maximum practicable extent, and the FCC should just forget about “manufacturing” competition or otherwise shaping the market. When the 1996 Telecommunications Act was written, the lingering apparent monopoly of the RBOCs in local calling areas appeared to justify an extensive FCC role in guiding the intended deregulation. In retrospect, it is clear that this role was largely counter-productive and that unanticipated competition was developing that would obviate both Read More ›

The more dynamic and fractured the telecom industry gets, the more that the House Judiciary Committee, responsible for antitrust enforcement, is inclined to think about the subject. The Committee passed a resolution Mar. 15th creating a special Task Force, which will expire Oct. 1, 2006, to gather evidence and take testimony from prophets of gloom and doom and firms seeking regulated advantages in the marketplace. Just what the country needs. Chairman F. James Sensenbrenner, Jr. (R-Wis.) circulated a memo to the Committee’s membership noting that the Committee and the antitrust laws “have played a critical role in fostering competition in the telecommunications industry” but apparently not good enough because “[a]fter ten years, many of the broad deregulatory and pro-competitive goals Read More ›

Net neutrality advocates argue that network providers have the ability and the incentive to block access by consumers to the web sites of their choice. At a Mar. 14th Senate Commerce Committee hearing featuring several high-placed Wall Street analysts, this question was addressed: SEN. STEVENS: Let me ask you about this net neutrality problem that two of you have mentioned substantially. Do you think a network operator could block access to a company like Google or Yahoo! and really get away with it? MR. SZYMCZAK (JPMorgan): I think that would be very difficult to sustain on an ongoing basis because if we think about it in a competitive nature, if the phone company were to block it, a lot of Read More ›

Experience should not disqualify FCC nominees, but the agency should have a predictable recusal mechanism to ensure it is perceived as an impartial decisionmaker (and to ensure that federal service is not misconstrued as an opportunity to reward friends and supporters). It does not.

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Mayors and city councils are the chief threat to affordable broadband, as my colleagues and I often remark. Many places, like my hometown of Portland, Oregon, for example, tax telecom because they don’t have to get taxpayer approval (they know they couldn’t get that). But unfortunately for the Portland City Council, Oregon has the initiative and the referendum. The City Council wanted to raise taxes on cellphones, but the industry signalled its intent to call for a referendum (a poll showed that 58% opposed the cellphone tax). Telecom taxes and cable franchise fees are generally viewed only in terms of local government’s insatiable need for cash. As a result, these services are taxed nearly the same as alcohol and tobacco. Read More ›

Professor Vernon L. Smith provides a helpful analytical tool which explains why the cost of health care has doubled in the past decade and generally outpaces inflation and also demonstrates why Universal Service is inherently flawed and ultimately unsustainable (see “Trust the Customer!” in the Wall Street Journal).

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One of history’s great propaganda experts believed that if you repeat a lie often enough it becomes the truth. A lot of politicians follow this advice. The Consumers Union and the Consumer Federation of America endlessly wave the same bloody shirt of higher phone rates. The latest incantation is: “If approved, [the] merger [between AT&T and BellSouth] will lead to higher local, long distance and cell phone prices for consumers across the country.” This is absurd because AT&T and BellSouth do not compete against each other for local or mobile phone services. And any competition between them in long distance is de minimis. The consumer groups see these companies as potential competitors. They have argued unsuccessfully for years that antitrust Read More ›

A survey conducted by the American Consumer Institute documents significant consumer savings as a result of the statewide franchise legislation enacted in Texas. For example: “The benefits claimed by those who switched were very substantial. According to the survey, customers that claimed benefits from switching to a competitor saved, on average, $22.50 per month on their cable bill, and those switching to any provider saved, on average, $22.27 per month. This suggests that price competition is occurring among the providers. For these customers, the savings represented approximately a 30% decrease in price, which is nearly identical to the FCC’s estimate of 27% lower price per channel in competitive markets (footnote omitted). From this, we can safely assume that the new Read More ›