New Study Says Regulation is Crushing Infrastructure
Anna-Maria Kovacs of Georgetown University’s Center for Business and Public Policy published a study today discussing the infrastructure-investment race in the telecommunications industry. Competition is booming in the communications economy, which means consumers have countless new choices and preferences. These options exist because of innovation in the technology sector; innovation that wouldn’t be possible if the government regulated the Internet, cable, and wireless the way it regulates traditional land-line phone companies, also know as Incumbent Local Exchange Carriers (ILECs).
ILECs are regulated at both the federal and state levels, and the regulations are extremely outdated. While the rest of the communications industry is transitioning to IP traffic, which is supported by consumer demand, ILECs are forced to sustain their old and costly legacy networks. Because ILECs are subject to carrier-of-last resort rules they are required to be available to every consumer no matter what. The capital they lose investing in a network most consumers don’t want or use means ILECs have less money to invest in transitioning to IP and innovating in other ways. When the government crushes ILECs with regulation that forces them to maintain obsolete technology, it’s the consumers who ultimately suffer.
Some people believe that cable companies are in danger of becoming a broadband monopoly and thus should be subject to the same kind of regulation ILECs face. To do so would hurt consumers even more by stunting innovation in the communications industry. Instead of crippling more companies, the government should free ILECs from regulation so they too can thrive. Stronger ILECs means more competition with cable companies, and competition means more innovation to benefit consumers. All the government needs to do is step out of the way of progress.