Confusing Technical Innovation and Profits

“The FCC’s plans to reclassify broadband under Title II are misguided,” [US Rep. Bob] Latta [(R-Ohio)] said in his announcement. “Imposing monopoly-era telephone rules on a 21st Century industry that has thrived under the current light-touch regulatory framework will undoubtedly impede the economic growth and innovation that have resulted in the broadband marketplace absent government interference. These businesses thrive on dynamism and the ability to evolve quickly to shifting market and consumer forces. Subjecting them to bureaucratic red tape won’t promote innovation, consumer welfare, or the economy. My legislation provides the certainty needed for continued investment in broadband networks and services that have been fundamental for job creation, productivity, and consumer choice.”

Here, let me rewrite that for you:

Imposing monopoly-era telephone rules on a telecom industry that consists of de facto monopolies in almost every market makes sense. The industry is currently thriving at the expense of both customers and the citizenry as a whole, due to the government being all but absent in the broadband marketplace. A business should not need to victimize its customers in order to thrive, and the current marketplace means that consumer forces on the telecoms are essentially non-existent. As a result, telecoms have been enjoying the kind of “thriving” that means huge profits for senior executives and shareholders, while their product offerings stagnate despite rising prices. “Regulation” doesn’t always mean excessive “bureaucratic red tape”, but even if it did the “victims” of this bureaucracy would be some of the wealthiest companies in the US, boasting of record profits while keeping their workers’ wages low and regularly raising the prices they charge consumers. Allowing them to operate without regulation hasn’t promoted innovation—except in billing—consumer welfare, or the economy. If we reclassify broadband service under Title II everyone—big telecom and small upstart—can have the certainty needed so that they will resume investing in broadband networks and services, and so that the telecoms have an incentive to start providing consumer choice. 

 

Now, my version isn’t 100% true—there are definitely some subjective elements and matters of perspective. But it’s certainly closer to reality than Rep. Latta’s version, and takes into consideration far more of the factors and factions involved, instead of pretending that ISPs are the only group who have any stake in how the internet works. 

[Data point: Under pseudo-Title II regulation during the 90s, US broadband was among the best in the world. During the last decade of non-regulation, US broadband has slipped to near the bottom of the industrialized world by every measure except ISP profits (also this, this, this, this, this, this, this, this, this, this, and this). In the same timeframe, EU broadband has steadily improved speed and shown true innovations in customer options, while keeping prices low. Also, the one thing that is all but guaranteed to have a really big impact, requiring ISPs of all stripes to lease the last mile, is apparently off the table.] 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s