Communications Policy for 2006 and Beyond

Article excerpt

  I. INTRODUCTION
 II. ACCESS NETWORK COMPETITION
     A. Spectrum Policy to Develop Access Networks
     B. Access Network Competition and Unbundling
     C. Competing Access Networks Require Interconnection

III. SERVICE COMPETITION
     A. Openness
     B. VolP as a Case in Point
 IV. NETWORK EFFECTS, ECONOMIES OF SCALE, AND UNIVERSAL
     SERVICE
     A. More Valuable for All Users
     B. Most Efficient
  V. PRACTICAL PROCESS
     A. National Versus State Jurisdiction
     B. FCC Organization
        1. Staff
        2. Gathering Data
        3. Culture
     C. Antitrust Enforcement
 VI. CONCLUSION

I. INTRODUCTION

The key goal of communications policy is to promote the welfare of our citizens, primarily through productivity gains. These productivity gains will increase business productivity and increase the benefits to consumers through access to better products and services and through lower prices. Much of the gains will come from decreases in prices of transmission and increases in the amount of information that can be cheaply and rapidly moved from place to place. These efficiency goals can be combined with other social and political goals such as universal access and make achievement of such goals much less costly.

The best means to achieve these goals of communications policy is to maximize the operations of markets. We prefer markets, as opposed to state-owned or state-managed communications businesses, because markets collect and distribute information about what sellers are willing to offer and buyers are willing to purchase in many ways better than the state. However, markets in communications industries may not produce optimal results for at least two principal reasons that may also apply to other industries. First, competition-winning firms tend to obtain market power and may have incentives and ability to deter new entry. In addition, winning firms have different incentives than new entrants that may affect the introduction of new products and services. Second, regulators seeking to distribute communications services to everyone in the nation, for very laudable social and economic reasons, have tended to interfere in ways that diminish the responsiveness of the market as well as the magnitude and speed of the introduction of new goods and services.

The United States currently has a communications policy in place that does not state clearly its own goals, yet applies regulations that greatly affect outcomes. Not surprisingly, the result appears to be deficient in both economic and social benefits. A better communications policy would substitute markets for regulation as a way to determine both what is sold and what price is paid while continuing to be conscious of specific market-power concerns and obtaining any desired social benefits in the most efficient manner possible. Such a wise policy must assure that new entrants, armed with a different sense of what can be sold and who might be persuaded to buy, should be able to challenge even the largest incumbents. An attribute of this policy would be that all could enjoy the social and economic benefits of ubiquitous and all-inclusive access to the network (i.e., allowing everyone the chance to communicate with everyone else all the time) without detracting materially from the price-setting and competitive mechanisms of markets or imposing an unnecessary cost burden on the overall economy.

One of the metrics for judging communications policy is whether the creation of new networks, goods, services, and markets is keeping pace with rapid technological advances. An important example of success in this respect is the proliferation of wireless communications. Apparently, the absence of retail price regulations, presence of cheap interconnection mandated by government, and existence of multiple providers have all led to high growth, high usage, high penetration, and high rate of technological change for wireless services. …