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E-mail Print Regulators should let Baby Bells set their own prices
Technology Op-Ed
10.13.2003

San Francisco Business Times, October 13, 2003

Though advertised in your Sept. 26-Oct. 2 commentary as "democracy," ("SBC seeks to strike blow against telecom democracy"), government regulation of telecommunications has failed consumers. The way to achieve the best service at the lowest prices is not through politics but economics and the marketplace.

The 1996 Telecom Act dictates that local telephone companies, like the Baby Bells, share elements of their networks with rivals, such as AT&T. The aim was to spur competition. But competition can only come from the market, when businesses compete against one another with their own resources.

Forced property sharing also discourages investors, who will not be eager to support an industry knowing that competitors could use company technology at below-cost prices. State regulators, following FCC rules, also decide the price for this access.

The California Public Utilities Commission (CPUC) will soon rule whether to allow SBC to charge its competitors more for using its networks. The Bells argue that the current price is far below what the market would bear, but no one will really know what the proper price is until this sector is subject to market forces rather than political ones.

If the California PUC really wants to help consumers and spur the state's economy, it will allow the Bells to set their own prices. And if the FCC wants to help usher in the next telecommunications revolution, it will remove requirements of forced access altogether. That would increase investment in telecom and put an end to the extra $120 each Californian household pays every year because of red tape.

After regulators were forced by legislation signed by President Clinton to deregulate wireless in 1994, cell phone competition took off and rates went down. Deregulation will work just as well with the traditional wireline sector.

Democracy has nothing to do with how to get the best services for consumers at the lowest price. It does, however, have everything to do with special interests throwing their weight around. It's time to stop subjecting consumers to politics and instead allow the market to bring the benefits of competition to the public.


Sonia Arrison is director of the Center for Technology Studies at the San Francisco-based Pacific Research Institute. She can be reached via email at sarrison@pacificresearch.org.

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