Flattening Barriers to Communications

In a bold move to modernize America’s outdated communications laws, this week Senator John Ensign (R-Nev.) introduced the Broadband Investment and Consumer Choice Act. It’s about time Congress embraced this issue, particularly since technology has vastly changed the way communications affect economic growth.

Technology boosts productivity and allows for greater opportunities around the world, a fact highlighted by Thomas Friedman in The World is Flat. Indeed, as workers in Silicon Valley are well aware, anyone with skills and a broadband connection can compete for programming, accounting and other types of well-paid jobs. In that kind of atmosphere, it’s important that Americans don’t let their high-speed connections fall behind. Unfortunately, that’s exactly what has happened.

Broadband’s Burdens

At last count, America ranked a dismal 16th in broadband deployment. Old legislation that erects barriers to entry and discourages investment by mandating price controls and forced sharing of networks is one of the key reasons Americans are at a disadvantage. Senator Ensign’s bill would go a long way towards fixing some of these problems.

It almost completely wipes out federal and state price controls and also protects fiber owners from forced-access rules. SBC, which has been more cautious than other telcos in fiber investment, issued a statement about the bill saying, “this will provide much-needed clarity as SBC invests in next-generation broadband services to bring consumers more choice and innovative service options, such as IP-based television.”

Other important parts of the Ensign bill include the elimination of state and local video franchises for all players in the market, as well as preference for privately run communications services over those operated by the government. Cable and telecom representatives, sometimes at odds over the franchising issue, seemed to agree on Ensign’s direction.

“We commend Sen. Ensign for crafting legislation that seeks to promote competition and innovation and treats services alike,” commented Kyle McSlarrow of the National Cable Television Association.

International Importance

A level regulatory playing field is indeed important if true competition is to bring consumers the best results, so the Senator’s move towards regulatory parity is significant. But the issue amounts to more than just competition here at home. We live in a globalized world — to compete effectively, American business needs to be strong.

Verizon CEO Ivan Seidenberg underscored that reality in a recent speech where he examined the success of Ireland.

During the 1980s, Ireland was struggling with high levels of unemployment, a huge deficit and a severe brain drain. This dismal economic outlook spurred policy makers to embrace changes towards a freer marketplace, and now Ireland is the second-wealthiest country in Europe.

“People and capital are flowing back into the country, with some 70 percent of the employment gains coming from foreign investment by companies like Dell, Microsoft and Cisco,” he said. “What really turned the economy around was a consensus around a core set of policies that we might call a 1.0 version of a ‘world is flat’ agenda.”

Lower taxes, fiscal discipline and the breaking down of unnecessary barriers to capital investment are all part of Seidenberg’s vision for a better America. And of course, his recommendations are based not only on international examples but personal experience: Verizon is currently negotiating video franchises in some 200 communities across the country, a process that is costly and slows the pace at which innovative services can reach consumers.

Strength in Freedom

Franchises were put in place to protect consumers from monopoly powers of cable providers, but now that the threat of monopoly has been extinguished, so too should the rules. Senator Ensign clearly understands this, and, one hopes, so do many of his colleagues in Washington, D.C.

Technology has created new opportunities and challenges. Laws that stymie the ability of entrepreneurs to respond to market realities should be scrapped. For years, observers of the telecommunications sector have acknowledged the need for comprehensive reform, so it’s encouraging to see an important member of Congress taking on the challenge.

Senator Ensign’s bill could be just what the country needs to flatten out barriers to greater consumer benefits and economic success.

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

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