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The Future of Broadband Starts Now

Last week brought some good news for those who wondered if the Bush administration would ever act to clean up the nation’s telecom mess. The Bush administration has finally taken its first real step toward its goal of ubiquitous broadband.

U.S. Solicitor General Theodore Olson, who represents the federal government in cases before the supreme court, announced last week that he would not appeal a recent D.C. appeals court decision vacating Federal Communication Commission (FCC) rules that forced local phone carriers to share parts of their networks with rivals.

This move is a win for consumers and the telecom industry because it indicates that the federal government acknowledges the fallacy of the Reed Hundt-era notion that government is better than the marketplace at creating competition. And while companies that benefit from regulation are obviously miffed that their free ride on competitor’s networks is slowly coming to an end, consumers are celebrating.

Consumers Celebrating

The Cuban American National Council, for example, issued a statement saying, “This decision eliminates one more hurdle in the long battle to end the regulatory chaos stifling broadband deployment.”

Harry Alford, the president of the National Black Chamber of Commerce agreed. “The business community, particularly the small business community, is going to benefit from this exponentially, and that will result in more jobs and expendable dollars in the marketplace,” Alford said.

Indeed, those who lamented the fact that President Bush had no real plans for achieving the goal of ubiquitous broadband by 2007 have been given a glimmer of hope that industry might get the regulatory reprieve it needs to match other countries, such as Japan and South Korea, that have much faster broadband than the United States.

But the long road toward fixing the nation’s telecom mess is only beginning.

A host of detrimental regulations remain in effect. And while the FCC also said last week that it would not seek to appeal the D.C. court ruling, AT&T and other companies that use government intervention as a competitive tool are pressuring state public utilities commissions to take up their cause.

Next Big Hurdle

California’s Public Utilities Commission has indicated it might appeal to the supreme court, but given that the FCC isn’t on board, the move is mostly a warning that state utility commissions are the next big hurdle on the path to true competition. And they will be a big hurdle, especially because state commissions still have the power to review leasing rates before they are raised.

Over the next few months, expect to see arguments by free-riding companies that price-control rules need to stay in place to promote competition in the local phone market. But these assertions are pure bunk.

There’s plenty of competition in the regular phone service market, more fierce now that cell phones and Voice over Internet Protocol (VoIP) technologies provide serious alternatives to a regular phone line. In a statement released this week, a group of former California PUC commissioners, including Mitch Wilk, Josiah Neeper, Henry Duque and Richard Bilas, made this important point.

“Consumers have more choices today than ever,” they said. “Local phone service alternatives are provided by multiple wireless networks, by cable telephony and increasingly by VoIP that turn the Internet into an economical and flexible phone network accessible almost anywhere.”

And if telephone companies were offered a more stable and less litigious regulatory environment, the broadband that allows inexpensive phone calls, among other important benefits, could be rolled out more quickly because investment would be less difficult to obtain.

Next Step for Powell and Bush

The next step FCC Chairman Michael Powell and the Bush administration should take is to encourage state representatives to relax local regulations. Perhaps California can be a starting place.

Near the end of this year, Governor Arnold Schwarzenegger will have the opportunity to appoint two new PUC commissioners when the terms of commissioners Loretta Lynch (January 2005) and Carl Wood (December 2004) expire. If the governor replaces them with solid, clear-thinking individuals, it would go a long way toward revitalizing the sagging telecommunications sector.

It’s a relief that the Bush administration is finally showing some leadership on this issue. For much too long, the nation’s so-called small-government leaders have ignored the regulatory morass that’s been dragging down the telecom sector and damaging American competitiveness.

Perhaps President Reagan’s recent passing reminded Republicans that red tape can seriously harm innovation. In an inspiring tribute, Arnold Schwarzenegger quoted Reagan saying, “If you are afraid of the future, then get out of the way, stand aside. The people of this country are ready to move again.”

The people of America are ready for ubiquitous broadband. The nation’s regulators should get out of the way and let it happen.


Sonia Arrison, a TechNewsWorld columnist, is director of Technology Studies at the California-based Pacific Research Institute.


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