July 17, 2003
CEI on the cost of telecom regs
The Competitive Enterprise Institute asks "Whatever Happened to Telecommunications Deregulation?" And it's a good question. CEI does a good job of showing that while regulation of telecom has been justified as beneficial to consumers, the data show the opposite.
Have artificially low wholesale prices for telecommunications services helped or harmed consumers? While many federal agencies are required to estimate the costs and benefits of the regulations they manage, the FCC has no such obligation. However, according to a new study released jointly by the Competitive Enterprise Institute and the New Millennium Research Council, regulatory rules that set wholesale rates far below costs have ended up costing Americans substantially more (chart) than what would be the case in the absence of such regulations. While these rules purported to encourage competition, they have usurped market forces and crippled the industry, and by correlation, the economy.
The telecommunications and computer industries have been long recognized as the major catalyst for economic growth. According to the Department of Commerce estimates, these industries have accounted for nearly all of the productivity growth in the economy. However, the industry and economy will meander aimlessly until regulatory rules are changed, the industry is deregulated and the monopoly power of regulators is curtailed.