ExtremeWisdom

Telcom Competition

I get a kick out of big industries like cable & telephone companies asking for the freedom to compete until someone wants to compete with them.

Here is a great piece about Telecom competition & TV over IP.

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Competition is always a good call

by Tom Giovanetti

When I built my home in rural Copper Canyon just over 10 years ago, I knew that I wouldn't have access to all the conveniences I was accustomed to. It was a long drive to the grocery store, and there was no pizza delivery, convenient restaurants, dry cleaners or cable TV.

Over the years, unfortunately, almost all of these conveniences have made their way to Copper Canyon. The highway leading to my home is now choked with grocery stores, restaurants and dry cleaners. But I still can't get cable TV.

I was never angry at cable companies because they didn't offer me service. I always understood that the local cable franchise simply made the business calculation that it wouldn't be cost-effective.

The same was true of my office building in Lewisville – no cable. When it became necessary for me to have access to C-SPAN, I did the only logical thing: I subscribed to satellite TV, both at home and at my office.

Was the cable company discriminating against me by not offering me access to its service? Well, yes, in a way, since the word "discriminate" means "to make a choice." But, no, not in the sense of offensive or prejudicial discrimination.

I have no inherent right to cable access. Cable access is simply a consumer good, not a necessity of life. So I was surprised to learn that cable companies are now demanding that their new competitors in the video business – telecom companies like SBC and Verizon – be required by law to offer their new video service to every single neighborhood in every city they enter.

How odd. When cable companies began offering phone service, they were never required to offer it to every cable subscriber. They rolled it out as they saw fit, as it made business sense, and where the most potential customers lived. In fact, to this day, cable companies do not offer voice service to all video subscribers.

What seems to be going on here is the same old story of companies lobbying for competitive advantage in legislation rather than in the market, or trying to hamstring their competitors with regulations – ironically, the very thing that telecom companies have always been accused of.

But the modern communications world is entirely unlike the past. Cable companies are offering voice, and telecom companies are offering video. Both offer high-speed Internet access, and all services are converging into a single market for data. Soon, voice will be free – simply a service you get from whomever you choose to be your data providers. Ultimately, everyone will be in the digital content business, and distinctions between cable, telecom, wireless and satellite won't be important.

Since this is clearly the direction that technology is headed, policy should be driven by technological reality and our laws should encourage robust competition. The winners will be Texas consumers, who will have access to the best combination of product and service, and the Texas economy, which will benefit from increased investment by all competitors.

Let's not saddle communications companies with the kind of regulations, franchise agreements, build-out requirements and taxes and fees that characterized communications policy of the past. We want new networks that carry new products and services. Let the competition begin.

New Telecom De-Regulation ads are running

Telecom Reform is one of those things that just doesn't get the airplay of a Schiavo Case or Social Security Reform.  That's too bad, since it impacts the functioning & the competitiveness of our economy.

The USTA is running ads that put the issue in perspective.  Unfortunately, they don't tell us what to do about it.  Call your Congressman & Senator and have them move to rewrite the 1996 telecom act.  Call your state representatives and have them deregulate to the maximum extent possible.

Heartland Institute Statement on SBC/AT&T Merger

This is from the Heartland Institute.

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Heartland Statement on SBC/AT&T and Verizon/MCI mergers

Recent announcements of plans by SBC to merge with AT&T and Verizon to merge with MCI have generated objections from consumer activists and competitors, including Carl Grivner, CEO of XO Communications, who testified before a Senate Judiciary Committee yesterday.

The following statement in defense of these mergers can be attributed to Joseph Bast, president of The Heartland Institute, a 21-year-old nonprofit research organization based in Chicago:

Concern over the negative effect on competition that the SBC/AT&T and Verizon/MCI mergers might have seems reasonable on its face, but it doesn't stand up to scrutiny.

* Has antitrust law ever worked in practice the way we hope/want it to in theory? Some excellent historical accounts say the answer is no: It is invariably used by competitors to handicap other players, and appears in markets where prices are falling and supply is rising, which by definition is not a market in which monopoly or cartel are problems. This aptly describes the telecom market today ... so why use antitrust here, now?

* The telecom industry is changing because of "convergence" __ formerly separate technologies and services are now coming together, providing benefits for consumers. Cable companies now offer telephone, and telephone offers television, and both offer broadband in competition with satellite companies, and so on. Convergence explains the urge to merge in the telecom industry. It's a good thing, not a bad thing.

* A common mistake in antitrust debates is to misdefine the market: Sure, Kellog and General Mills dominate the breakfast cereal market, but not the breakfast foods market, and certainly not the food market .... and they are losing market share to producers of other products such as breakfast bars, waffles etc. etc. In telecom, most critics of consolidation overlook competing technological platforms __ satellite, cable, wireline phone, wireless phone, Wi_Fi, and coming soon, Wi_Max and whoknowswhat. If you define the market correctly (larger), SBC and Verizon will still be small players.

* Yale Brozen, the late great economist at the University of Chicago, used to say "only government can create monopolies." His point was that high prices and profits prompt competitors to enter markets until prices and profits return to lower levels. Governments stop this from happening to erecting barriers to entry, often in the form of price controls, licensing laws, and heavy regulations that incumbents are either exempted from or can afford to comply with. Government regulations in telecom are largely responsible for most of the ills that affect the industry. Why should we think those ills justify another round of regulation in the form of antitrust?

Grass Roots Action on Telecom is Paying Off

IL Senate Bill 1700 passed the Senate Friday with a 34-14 vote.  Now to get passage in the House.

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SB1700; a bill that eliminates outdated regulations while providing consumers greater access to the latest technologies; has passed the Illinois Senate with broad support, garnering a 37 to 14 majority.  It will soon be up in the Illinois House.

This bill opens telecommunication services to competition; where markets, not regulators; will shape the future of innovation and growth. If you haven’t done so already, we strongly urge you to contact your House Representative today.

It is important that you let them know how you feel about improving telecom laws in Illinois.  Ask them to free up Illinois Telecom so Illinois companies can create more jobs.

Our Bright Future...if we choose it

With all the hot political issues out there, not many people take the time to think about Telecommunications Regulation.

Allow me to prompt you to think about it a little.

• Cable and phone companies are entering each other's markets and offering single billing for Internet, TV, and local & long distance service.

• Wireless hotspots are expanding from airports & hotels to whole blocks in some cities.

• Wireless phones are competing directly with landlines (copper & wireline services) Here in IL, it appears that SBC has lost "market share" to wireless. Surveys are showing increasing numbers of people whose only phone is wireless.

• The technology that allows you to get broadband through your electricity lines(called BPL)  is improving fast enough that Trump is placing it in his next building.

The current 1930 style regulation is putting a wet blanket over this dynamic environment.  This impedes the investment necessary to bring us our future faster.  ___

This Study from the Competitive Enterprise Institute questions the need for continued regulation of telecom.

Excerpt:

In the absence of competition, regulations serve to protect consumers against monopoly market power.  This is, in theory, the reason why the telecommunications local exchange market is so heavily regulated.  While the days of the monopoly have long passed, when do policymakers know if there is enough competition to let markets operate without regulation?  The Federal Communications Commission (FCC) reports that competitive local exchange carriers (CLECs) now garner 16.3 percent of the market, leaving the remaining market share to the incumbent local exchange carriers (ILECs).   

However, these statistics do not include competition from wireless telephones, high-speed data services, and Internet telephone services.  If wireless telephone services were found to be substitutes for traditional telephone services (referred to in this paper as wireline services), then this competition, not to mention competition from other technologies, would replace the need for the regulations that control the wireline incumbent’s prices and services.

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Why is this important?  Because broadband technology is an even greater equalizer than the printing press or the gun.  We are entering an age where every blogger/e-list member can become his own media outlet, broadcasting ideas complete with links, text, data, voice, and video.  The faster you get data and content, the faster you can understand the world around you.

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As an aside...In a world where you can Google for virtually any chunk of knowledge you might need, isn't it pretty obvious that a good chunk of the educational superstructure - overpaid bureaucracy, under informed content providers (teachers & textbook publishers), brick and mortar physical plant, etc.  -  is getting more obsolete by the day.