TCS Daily

Bad for Broadband

By Duane D. Freese - February 22, 2002 12:00 AM

A new study by telecommunications' economists Robert Hall of Stanford University, author of The Flat Tax, and William Lehr of Columbia University warns that implementation of the so-called Tauzin-Dingell bill would "return us to the days of one-company control over telephone services."

The white paper, Promoting Broadband Investment and Avoiding Monopoly, was funded by AT&T, but builds upon previous work of the two noted economists. It refutes contentions by bill supporters that freeing the local Bell monopolies from their obligations to open their local loops and share facilities with competitors under the Telecommunications Act of 1996 will promote broadband deployment.

Instead, the study notes the history of investment in broadband facilities shows that only after competition became a threat after the 1996 act did the Bells invest in high-speed service.

The economists argue that Tauzin-Dingell's rollback of the competitive provisions in the 1996 telecom act will irreparably damage competitive phone and broadband providers. "Both in the short term and longer term, prospects for investment in broadband infrastructure and services are best served if we retain the pro-competitive provisions of the Telecom Act," the economists conclude.

The paper comes as the House prepares to vote next week on H.R. 1542, the Tauzin-Dingell bill. It also arises as the Federal Communications Commission has issued a proposed rule-making about new rules for broadband deployment that would likewise free the Bells of regulatory scrutiny for their high-speed lines.

Such action to supposedly encourage the Bells to deploy broadband comes despite objections by many state regulators and $2 billion in fines assessed against the Bells for violations of their merger agreements and the 1996 Telecom Act.

The economists note that regulatory uncertainty created by FCC and congressional actions is the real culprit in holding back broadband investment.


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