In 1982, a federal court split up the old Bell System to help MCI and Sprint compete. The breakup was followed by three decades of harsh regulations at the federal and state levels that carved away incumbent local exchange carriers’ (ILECs) competitive advantages against Cable TV Telephony rivals or Competing Local Exchange Carriers (CLECs).
Today the market is much different. In the last ten years, the number of incumbent telephone lines and traffic has fallen in half. Besides competition from cable and other wireless providers, there are three times as many wireless phones than wireline phones. In fact, half of Americans use their wireless phone as their predominant telecom service — not wireline service, which is now in decline by 5% to 10% each year. Indeed, consumers with broadband services are bypassing the old network with Internet-based voiced services, including free calling services by Google Voice and Microsoft’s Skype.
The reality is that tech companies are interested in investing in advanced wireless and broadband networks, not the traditional copper-wired networks being shunned by consumers. However, if we want companies to invest in these advanced networks and create jobs, it’s time to recognize that the old regulations resulted after the breakup of the Bell System are no longer needed.
Ohio’s Senate Bill 271 sets its sights on one archaic rule that needs to end. SB 271 permits incumbent wireline providers to shed its obligation as the “provider of last resort,” but only in markets where the Public Utilities Commission of Ohio has deemed an ILEC as “fully competitive.” That means the ILECs no longer need to invest in old outdated copper technologies, freeing them up to invest in wireless and broadband services sought by Ohio consumers. That investment means jobs for the state, it means innovation, and it means competition.
SB 271 contains a “fail-safe” mechanism under which the Ohio Public Utilities Commission would address the unlikely circumstance that a customer would be left with no competitive options. But by acknowledging the arrival of robust competition, Ohio lawmakers are letting carriers direct new investments into advanced telecommunications. Modernizing communications regulation that will encourage investment and job creation makes good sense for the state and its citizens.
Alan Daley is a retiree who writes for the American Consumer Institute and follows public policy from the consumer’s perspective.