Mike Klein Online

Georgia Telecom: “Statewide Cobwebs of Regulation”

Economies require technology just as mammals require oxygen.  In effect, technology is the oxygen from which economic progress is derived.  If you wonder about that idea, consider that Soviets launched the first man into space through Kremlin willpower but Americans landed the first men on the moon because superior private sector research and technology enabled the U.S. space program to overcome the Soviet albatross.

Lately we are forced to become accustomed to some fairly terrifying economic ideas.  Big recessions will happen.  Millions will lose jobs.  Vast amounts of accumulated wealth will vanish. Governments will be overwhelmed by service demands.  Tax bases will shrink.  Politicians who are challenged to create new ideas will often look elsewhere to see what the other guy is doing. Despite that, technology marches forward and it provides the path to future success.

Technology innovation is the gospel preached by George Gilder, the internationally acclaimed economist, author and former Reagan administration policy confidant who spends much time thinking and writing about technology.  The Gilder view is, “I always say don’t solve problems.  When you solve problems you end up feeding your failures, starving your strengths and creating a costly mediocrity. Don’t solve problems.  Pursue opportunities.”

Georgia: A Moment of Truth

Gilder is co-author of “Georgia’s Unfinished Telecom Agenda,” a Discovery Institute white paper released this month that discusses how telecommunications industry regulatory reform could help grow Georgia’s current economy and protect it against future downturns.

Gilder addressed the year’s first Georgia Public Policy Foundation Leadership Breakfast and he provided this stirring analysis that should awaken any Georgian.  “Georgia:  A moment of truth here.  Georgia has been lagging in deregulation.  The Discovery Institute shows that you are way behind Alabama.  That should be a wake-up call.”

The Discovery report compares Georgia’s telecom regulatory environment to several of our southern neighbors and the comparison is none too flattering.  Alabama exempted telecom services from state public service commission jurisdiction beginning January 2011.  Florida, North, Carolina, South Carolina and Tennessee made changes to loosen jurisdiction.

“Meanwhile,” the report states, “Georgia’s telecommunications providers remain subject to unnecessary and anticompetitive regulation which depresses industry valuations and thus investment.”   Charter Communications, Comcast, Cox, Mediacom and Time Warner have pieces of Georgia’s telecom industry, as do mobile giants AT&T, Verizon, Sprint and T-Mobile, along with smaller competitive local exchange carrier companies such as CLEAR.

Explosive Broadband Service Growth

The explosion of broadband technology is largely a 21st Century phenomenon.  It grows at extraordinary rates, from 2% of the U.S. population utilizing broadband services when the new century began to 60% today.  Wireless bandwidth growth was 542% over the same ten years.

Google … the company whose name eventually became a verb … “Google It!” … is entirely dependent on broadband technology.  Apple and every other smart (or dumb) mobile phone manufacturer have business models based on ever expanding available bandwidth.  Internet based classrooms are bandwidth-based models.  So are internet traffic reports.  Your home is increasingly an internet hub that supports its own network.

Gilder and co-author Hance Haney identified Georgia “statewide cobwebs of regulation” and made five proposals they believe would “expand customer choice, decrease prices, and ignite the broadband expansion necessary to economic growth.”  Those five proposals are:

** Allow pricing freedom that permits development of customized service offerings.

** Reduce inflated intrastate access charges for smaller rural providers and new entrants.

** Eliminate filing requirements that ensure rivals received detailed information about a competitor’s new or improved services or products.

** Eliminate utility commission jurisdiction for numerous consumer issues.

** Terminate provider-of-last-resort obligations and their associated costs that are not equally imposed on all providers.

“Simple Reforms of Outmoded Laws”

Gilder and Haney predict elimination of Georgia’s “statewide cobwebs of regulation” would create “at least $3.3 billion over the next five years in the form of lower prices for voice services, plus an additional $3.9 billion in economic impact annually from increased broadband availability and use – including 71,059 new jobs per year.”

Gilder and Haney write, “These reforms aren’t novel or unprecedented … By simple reforms of outmoded laws, Georgia can ignite a new spiral of innovation and revival based on new technologies and services tapping into new worldwide webs of glass and light and air.”

Additional Resources

Discovery Institute, www.discovery.org

Georgia Public Policy Foundation, www.gppf.org

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January 15, 2010 - Posted by | Uncategorized | , , , , , , , ,

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