Payphone regulations remain in the wireless age

BusinessConsumersEconomy, Business and FinanceLitigation and RegulationInvestmentsTime Warner Inc.Cincinnati Bell Incorporated

“Rethink Possible” is AT&T’s current marketing motto. Government’s dictum, on the other hand, is “Regulate Possible until rethinking possible becomes impossible.”

Why does the Kentucky Public Service Commission still have regulations on the books that discourage established telecommunication companies such as Cincinnati Bell and AT&T from investing in more towers, better signals and improved service?

The fact that Kentuckians still suffer under regulations such as a “provider of last resort” mandate indicates that government not only proves incapable of keeping up with the marketplace, it in fact hinders it from operating freely.

Investments in signals and service would mean fewer dropped calls. And they would encourage companies to expand networks so that more Kentucky moms could work from home and dads could start businesses.

Now, before you hammer me for stereotyping, that’s exactly the point: Those “traditional” roles existed back in the day — when many of these telecom regulations started.

We would not stand for government not acknowledging that moms can start businesses so some dads could stay home. So why should we tolerate the kind of costly over-regulation that focuses on nearly extinct products like land lines and pay phones (remember them?) to the detriment of investment in the kind of technology that improves cell-phone service used by more and more rural — and even elderly — Kentuckians these days?

When only one telecom company existed and competition did not, a better case could be made for regulation to ensure consumer protection. But a superior form of consumer protection now exists: competition.

So, how does the “provider of last resort” rule directly affect Kentucky businesses?

Here’s an example: Someone decides to offer residents of a new apartment building a package deal that includes cable and telephone service through companies such as Insight or Time Warner. However, if a single tenant in the building says they want AT&T, the “provider of last resort” regulation forces AT&T to run a landline to the site and install it in the building — even if it’s just for one tenant in a building with 50 units.

AT&T, not Kentucky’s PSC or any other government entity, should decide where to invest in new lines.

Adhering to this regulation in multiple neighborhoods statewide can result in hundreds of thousands of dollars not used for constructing new towers or expanding capacity to encourage more tele-medicine transactions to occur or new businesses to open.

Politicians and bureaucrats cry for more and better broadband coverage in the commonwealth. A Federal Communications Commission report released in June shows that 28 percent of people lack access in rural areas, compared with 3 percent in non-rural areas. Yet, the same lawmakers and government types shy away from addressing archaic regulations held over from the age of rotary phones out of fear that constituents who live in rural areas will be left without service.

This sky-is-falling, Chicken Little mantra will find its way into the thick binder of state government’s many other unproven claims.

In 2006, the Kentucky Legislature did begin down the road of loosening some of the shackles of antiquated regulations from the telecom industry. But it stopped before reaching the end of the party line. As a result, other states, including some neighboring ones, caught up with and surpassed the Bluegrass state in the competition for telecom’s limited capital investments.

The Pew Research Center reports 84 percent of all Americans now use some kind of wireless device. Meanwhile, all kinds of protection exists for consumers at the federal and state level.

The only thing needed now: free market-minded lawmakers willing to get out their legislative backhoes, clear out the underbrush of telecom regulations and unleash some of that economic power that lays dormant at the foundation of our tepid economy.

 

Jim Waters is vice president of communications for the Bluegrass Institute, Kentucky’s free-market think tank. You can reach him at jwaters@freedomkentucky.com.

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