No Telecom Regulation For Cablecos
In most areas of the country the telephone companies (Telcos) have existed for approximately 100 years. In most of the last 100 years consumers have had no, or little choice, in choosing a supplier of telecommunication services. The provision of telecommunication services was a nature monopoly which the government of the time chose to regulate. This regulation allowed the Telcos to use their rate-payers to fund new investment rather than the traditional injection of capital by Telco investors.
In the short term the regulation of the telecommunications business provided the customer with good service at a reasonable price. In the medium and long term this regulation has produced a service provider which failed to innovate and failed to develop lower cost modes of operation. The system of regulation was perverted by the Telcos to enable higher profits. Basically the higher the cost the greater the allowed rate of return which equates directly to profits.
In the early 1990s the prospect of convergence of telecommunication and entertainment services was first discussed. The Telcos realized their copper pairs were too skinny (in a broadband sense) to deliver more than simple voice services to consumers. They wanted to build-out fiber to the curbside but wanted their customers to fund this investment. The regulatory authorities wisely advised them to use their own money for new investment.
The Telcos decided not to invest their own money and took no active steps to being able to provide consumers entertainment services. ADSL technology was developed as an interim fix to squeeze more bandwidth, and more life, from their network without significant new investment. ADSL allowed the Telcos to offer more bandwidth without taking the step of building a proper broadband network. The cable companies (Cablecos), seeing the writing on the wall, invested significant monies into their networks which would allow the convergence of voice and entertainment services onto one network. At the same time, faced with some steps toward deregulation, many Telcos reduced new investment in their network infrastructure, and in some cases even basic maintenance.
Once it became clear the Cablecos were becoming a real threat to their basic voice service business the Telcos argue for a level playing field and with the Cablecos declared common carriers. This would force the Cablecos to open their networks to competitors in manner similar to what was forced on the Telcos in the name of deregulation in an attempt to jump start competition. It didn't work in the Telco market and it would only weaken the Cableco efforts to compete against the Telcos and therefore harm consumers. The Cablecos should not be forced to open their networks to retail service resellers for at least 10 years unless they choose to do so for business reasons.
While society received some benefit from regulating the Telcos it is time to allow the development of a true competitor which possesses its own content conduit to the curbside. Only a supplier with its own wire, or fiber, running past the customers can become a true competitor to the Telcos as they exist today. The Telcos owe it to society to allow the development of a proper competitor in their wireline voice business. Society deserves to have a choice of suppliers of wireline voice service and the Telcos should be forced to allow the development of a true competitor. The Telcos owe society, and the economy, a great deal for being allowed to build a large and profitable business on the backs of the rate-payers or consumers.
The telecom regulatory system has been significantly shaped by years of Telco industry lobbying. To subject the Cablecos to the same regulatory system would guarantee competitive victory by the Telcos as some have over 100 years experience circumventing the regulations. The Cablecos should have a 10 year window of opportunity to build their networks and business before being subjected to the same regulations as the Telcos. The Telcos have managed to build significant businesses over the last 100 years and would crush any competition from the Cablecos if the Cablecos were sujected to the same regulations at this time. The Telcos understand the regulations and regulatory agency and would easily use it to their advantage to minimize the competition from a Cableco to the disadvantage of the consumer.
As an incentive to the Cablecos to continue to innovate and to fully develop into a provider of voice services to consumers they should not be subject to the same regulation as the Telcos. Society requires a true competitor to the Telcos and every encouragement should be given to the Cablecos to develop this line of business. The Cablecos should not be declared a common carrier and they should not be forced to allow retail resale of their Internet service. In the long run society would be much better off with a true competitor to the Telcos. The regulators need to develop vision and to stand up the Telcos who are only concerned with a preservation of the value of their assets and their existing business model. We would be better served by a Telco which was truly interested in developing new modes of business operation and was able to provide superior customer service.