TechKnowledge No. 6

Will Congress Ever Deregulate Broadband?

By Adam D. Thierer
May 1, 2001

Surveys reveal that Americans want high-speed connections to the Internet - - and they want them now. But two major obstacles stand in the way. First, many Americans are not willing to pony up the cash to pay for those services. Second, policy makers are not yet willing to let some communications companies provide broadband services, even if consumers are willing to pay.

At least part of this equation may be set to change as the House of Representatives took fast action during the last week of April to move a pro-deregulatory measure that would make it legal for regional Bell operating companies to offer consumers high-speed broadband services across long-distance boundaries.

The bill, H.R. 1542, The Internet Freedom and Broadband Deployment Act of 2001, is sponsored by House Energy and Commerce Chairman Billy Tauzin (R-La.) and ranking member John Dingell, (D-Mich.). The Tauzin-Dingell bill would level the playing field by allowing Baby Bell companies to provide customers with broadband services the same way cable and satellite companies are currently allowed to. A similar version of the bill garnered over 220 cosponsors in the House last year but did not achieve final passage due to lack of interest in the Senate.

Although not perfect, the bill is still an important first step toward guaranteeing that more Americans have access to the broadband services they desire. Here’s why. Imagine you live in a small town; call it Sleepytown, USA. There aren’t a lot of telecom providers in your area, in fact, your local telephone company is really the only show in town. Nonetheless, they may be able to hook your home up to a high-speed broadband connection.

Here’s the problem. To hook you up, that telephone company may have to cross an imaginary regulatory boundary on a map called an interLATA line. Over 150 of these interLATA lines were sketched out by a judge in the early 1980s in an attempt to quarantine the Baby Bells within the local telephone market and keep them out of the long-distance business.

Today, these lines prohibit the Bells from offering broadband services to consumers in countless communities like Sleepytown because it is illegal for them to cross those old interLATA lines scribbled on some regulator’s map down at the FCC. Let me repeat that: It would be a crime for the Bells to offer you high-speed Internet access over these illogical boundaries.

A little crazy, huh? That’s why the Tauzin-Dingell bill proposes to end these illogical prohibitions and decriminalize the provision of broadband service to these communities by the Baby Bells. The bill also rejects infrastructure socialism by ensuring that “line-sharing” requirements cannot be applied to broadband offerings. Such forced access requirements would discourage innovation since the Bells would have to share with their competitors the new broadband services they develop.

At this point you may be thinking that I’m a lackey for the Baby Bell behemoths that would most benefit from this sort of deregulation. Guess again. I don’t really need my local telephone provider. I don’t have anything against them, I just don’t like having a lot of wires coming into my home.

So, I’m doing something about it. I’ve started ripping cable and telephone wires out of my house and have bought two satellite dishes and two cell phones instead. Today, I get my telephone service, entertainment services, and data and Internet services through these wireless devices. I don’t really need my local phone company or cable provider for broadband or much of anything else anymore. I do, however, have to pony up a little extra cash each month for these advanced services.

While my house is likely to represent the home of the future, not everyone has access to these same wireless options today (although most homes soon will). In the meantime, it is important to allow Americans who want broadband, and who can only get it from their local telephone company, to be able to do so. It is foolish public policy to deny citizens the right to purchase technologies and services that are at their disposal.

Which leads back to the question, will Americans be willing to pick up the tab associated with high-speed access to the home? Let’s face it, it costs a lot of money to string wires across the country or launch satellites into space in an effort to provide consumers with fast Net access. Companies will expect to be compensated for the costs associated with these investments.

Regrettably, however, everyone’s looking for a free Internet lunch. But as ZDNet.com technology columnist David Coursey asks, “What makes you think you deserve free Internet anything?” Good question. Can any of us make a moral claim to the “right” to inexpensive or free communications technologies and Internet services?

Deregulation is vital to ensure that companies are given the freedom to innovate and offer consumers the full range of communications and data services they desire. But, at the end of the day, consumers must be willing to pay for those services. The only way we’ll ever find out how much broadband Americans really want is to comprehensively deregulate this marketplace, as the Tauzin-Dingell bill does, and then watch and see what happens.

Adam D. Thierer (athierer [at] cato [dot] org) is the Director of Telecommunications Studies at the Cato Institute in Washington, D.C.