June 18, 2014
Last week, the Coalition for the New Economy reported that more than 70 U.S. lawmakers had written to ask Federal Communication Commission (FCC) Chairman Tom Wheeler to rethink the FCC’s new policy that will allow it to intervene to overturn state and local laws aimed at ensuring government-owned broadband networks (GONs) operate on the same playing field as private networks.
This week, another voice – the Free State Foundation (FSF), a think tank in Maryland – weighs in on the matter.
Like the more than 70 lawmakers, FSF’s Randolph J. May argues the FCC may not have the legal authority to overrule the local and state laws and that the FCC’s policy will harm competition. May quotes his colleague Seth Cooper who noted, “Such laws prevent local government conflicts of interest with the private sector marketplace competitors who invest tens of millions of dollars in localities to build out their broadband networks.”
May also argues one of the chief purposes of the laws Wheeler wants to usurp are protecting taxpayers. Again May quotes his colleague Cooper who said the losses are, “potentially devastating.” May then lists some of the worst taxpayer-funded broadband failures, “including Mooresville and Davidson, North Carolina, Utah’s UTOPIA network, Provo, Utah, Lafayette, Louisiana, and the N.C. Eastern Municipal Power Agency.”
How then to spur competition, which is what the FCC says it wants to do?
May admits that in places where there really is no market for broadband, the government shouldn’t step in. In fact, he says, “If it is clear that private sector companies are unable or unwilling to offer service, then there may be a proper role for a municipal system.” But, he says, these instances are “rare.”
In all other circumstances, May advises lawmakers and the federal executive branch (of which the FCC is a part) take a light regulatory touch. Specifically, quoting a Free State Foundation paper, May says, “Regulatory intervention is only warranted in instances where there is convincing evidence of a market failure that is likely to harm consumers. Absent such evidence of market failure, service and product suppliers should be free to exercise their informed business judgment in an entrepreneurial fashion.” (Emphasis added.)
More than 96 percent of Americans have access to high-speed broadband. And, as CNE wrote earlier this week, the U.S. is leaps and bounds ahead of Europe when it comes to access to and usage of broadband.
Clearly the market hasn’t failed in the U.S. Which is why the FCC shouldn’t mess with what’s working.
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