|
|
|
|
Prescriptive Regulations and Telecommunications: Old Lessons Not Learned
By Wayne A. Leighton
Introduction
The Telecommunications Act of 1996 was an important first step toward clearing the regulatory underbrush that thwarted new competitors, new advances in technology, and new services for consumers. The Federal Communications Commission, however, has largely failed to initiate true deregulation. In the areas of universal service, local competition, and access charges, the FCC presumes that by setting prices or otherwise dictating the terms of trade to help new entrants, it will "promote" competition. In reality, the agency's actions thwart the market process and make true competition less likely.
By interfering with the market process, the FCC disrupts the natural, spontaneous order that comes about as economic actors pursue their own interests in a world of uncertainty and change. Free markets provide opportunities for entrepreneurs to capture above-normal profits if they discover more efficient ways to meet consumer demands —by providing customers with better service, better quality, or a better price.
The idea that government planning or regulation cannot mimic the competitive market process is not a mere ideological mantra. It is an historical fact rooted in the experiences of socialist planners that date back to at least the 1920s and 1930s. This article explains the parallels between the errors of socialist planners over half a century ago and the errors of the FCC today. The basic message is that the FCC would do well to take a page from history and rethink its approach to telecommunications deregulation.
Full Text (PDF, 22 pages, 87 KB)