A Strong Sector: The Key to Victory

Where do we go from here? This is the question that many of Citizens for a Sound Economy’s 280,000 activists have been asking the last few weeks.

While we will continue to mourn the senseless loss of life in New York and Washington, we must now build for the future. While terrorists can attack our buildings and destroy our property, they cannot extinguish the ingenuity and spirit that built our nation.

As a nation we face two important challenges. First, we must secure our people against further attacks and terrorist threats. Second, we must rebuild and strengthen our economy, unleashing the entrepreneurship and creativity that generated our country’s prosperity. Economic security is the source of national security. A sound economy is the key to victory.

Before September 11th, the members of CSE aggressively fought against the regulations that severely damaged the telecommunications industry and blocked needed capital investments in entire sectors of the industry. What was a good idea then is an economic imperative now.

Now, regulatory policy has taken on an ethical dimension. This was shown in New York City, when the telecommunications industry responded to the FCC’s change in regulatory priority by investing $1 billion in private capital and bringing Wall Street back online in less than a week, a Herculean accomplishment. That spike in investment and productivity became possible when the FCC told phone companies to “do what you can to restore service as a 1st priority and catch up with the regulatory detail as a 2nd priority.” A deregulated telecommunications industry must become the foundation of an economic security plan. American businesses and workers can work miracles when allowed.

Just as America’s prosperity and economic expansion of the past emboldened regulators to impose rules to outlaw competitive actions, fence-off vital resources, and persecute successful businesses, today’s economic anxiety requires policymakers to rethink such intervention. Currently, the regulatory burden costs Americans more than $700 billion annually; regulations that impose costs on the economy while providing no benefits should be eliminated.

Ultimately, the strength of our country relies on the strength of our economy. Excessive regulation drains the private sector of the resources required to fuel our continued economic growth. A thriving economy must be an important component of America’s security; as we move to eradicate terrorism we cannot forget what made our country strong in the first place.

CSE’s Telecommunications Goals

Eliminate the Most Damaging Telecommunications Regulations

On September 11, the FCC suspended several regulations in New York City, as it has the authority to do. This suspension of regulations allowed the telecommunications industry to enter a dangerous environment with massive manpower. The industry invested $1 billion and successfully brought Wall Street back on line in less than a week. It turns out that corporations are part of the solution—when they can operate in an environment that frees them from damaging regulations.

The members of CSE call for an immediate elimination, or at least an FCC forbearance, of the regulations and taxes that are causing the most damage to the telecommunications industry:

Do Not Force Telephone Companies to Share Networks or Locations. Regulations that force telecommunications companies to share their networks and locations create a vulnerability in time of crisis. These regulations produce a shared point of failure that is easy to disrupt during natural disasters or times of national crisis. Moreover, co-location requirements expose companies to security risks since they must allow access to competitor employees without background checks. Congress must strip away these harmful, outdated regulations.

Eliminate Regulations that Stifle Investment in Broadband. Currently, network-sharing regulations set prices for network access at below cost. As a result, the level of investment in improved broadband service is feeble. Congress must eliminate these broadband price caps to encourage investment in broadband and return growth to the high-tech economy. Moreover, it must immediately eliminate regulations that stop telecommunications companies from making the investments needed to roll out broadband capacity on a national scale.

Accelerate Depreciation Schedules. The current tax code discourages capital investment by prohibiting businesses from deducting full investment expenses in the year of purchase. Unlike all other expenses, deductions for investments must be made over many years according to complicated depreciation schedules. Congress should streamline these schedules to lessen the disincentive on capital investment and help expand the economy.