RALEIGH – The market for telephony is highly competitive.
The ubiquity of advertising by wired, cable, and wireless companies is one indicator. Ads both facilitate competition – that’s one reason why advertising serves the interests of consumers by reducing prices – and constitute visible evidence of competition.
Another indicator is the rapid decline in telephone landlines in North Carolina. According to data reported last week by the Triangle Business Journal, the number of access lines delivered by the three big, regulated telephone companies in the state – AT&T, Embarq, and Verizon – was just over 3 million in 2007, down 25 percent from the 2002 figure.
Obviously, North Carolinians are still communicating. But some have cut one or all of their landlines and gone wireless, either with their previous telephone provider or one of the other two. Some have exited entirely for cable or Internet-based phone service, or rely mostly on email.
Given these realities, it’s not surprising that the phone companies are seeking to get out from under burdensome state regulations imposed decades ago, when only Captain Kirk or Commander Koenig had wireless communicators. It stands to reason that the state should not, through tax or regulatory policy, give one competitor an advantage over another. House Bill 1180 would end reporting requirements and other rules that apply only to, say, AT&T but not Time Warner.
The Public Staff of the N.C. Utilities Commission opposes the legislature. Its executive director told TBJ that keeping tighter regulations on phone companies serves consumers because “cable companies have no choice but to provide excellent service to compete.” I agree that competitive pressures improve service quality, but that’s precisely why government standards aren’t needed here. Once it is granted that consumers who experience shoddy service tend to go elsewhere, you quickly see that maximizing competition, not regulation, is the proper policy goal.
Consumers don’t need the government to force one competitor to “behave” so the others will, too. They already have that ability, via the power of choice.
The original sin of this story was when government granted Ma Bell and other phone companies monopoly franchises. It never should have. A century later, it’s time to clean up the rest of the mess. Policymakers need to eliminate any remaining barriers to entry in telecommunications, while lifting any restrictions that impede the transition of existing firms from monopolists to competitors.
Hood is president of the John Locke Foundation