Tech Bytes – Tid Bits in Tech News: Telecom Consumers Have Reasons to be Encouraged

Two announcements made on Monday signal that the old world of heavy-handed government regulation of American telecommunications might be coming to an end. The Bush administration formally appointed Michael Powell as the new Chairman of the Federal Communications Commission (FCC). Shortly thereafter, the FCC announced that it had approved SBC’s 271 (long-distance) applications in both Oklahoma and Kansas.

Both developments will immediately benefit consumers, but the message they send should be of even greater consequence. Kansas and Oklahoma are the first rural states the FCC has judged to have local telecommunications markets “irrecoverably open to competition.” Up to this point, only New York and Texas, with thriving local business and urban competition, have met the FCC’s standard. If this decision is any indication, telecommunications consumers across the nation may soon enjoy increased competition, lower prices, and higher quality service.

The Powell appointment also suggests that the interests of consumers will be a priority of the new FCC. As FCC Commissioner, Powell has repeatedly voted for more deregulation and less intervention. Powell has also supported policies and regulatory forbearance, which establish real property rights that encourage investment and lower prices brought about by facilities-based competition.

The 1996 Telecommunications Act has failed to live up to its promise thus far. But with Powell as Chairman, the FCC should revitalize the spirit of deregulation contained in the Act. A Powell-led FCC will care more about process and enforcement than managing outcomes. This is an important distinction and makes further deregulation more likely.

Under Chairman William Kennard’s stewardship, it seemed that the FCC forgot that the words “competition” and “competitiveness” have the same root and are intimately related. When regulators focus too much on outcomes and predetermined levels of competition, they often suppress the very competitiveness that benefits consumers. Consumers benefit when competing businesses take risks in an effort to win market share and secure higher earnings. Sometimes such risks are rewarded and the company succeeds; other times the risk backfires and the company sees its market share and earnings drop. When such developments occur in a free market governed by clear and conspicuous rules, consumers are the ultimate victors.

Monday’s developments seem promising. It is our hope that similar developments will continue and the ultimate goal of telecommunications deregulation is reaffirmed at every opportunity.