I commented on this over at TechDirt, but had to challenge their assertion here as well. I’m not one to let a ridiculous claim go unanswered, so below is the text of my reply to Mike at TD. Their basic contention was the telcos are opposing regulations now, but it was regulation that built them (which is essentially true). But TD goes further and says:
[T]he next time someone says this is all about keeping regulators away from the telcos, remind them that regulations built these telcos into the position they’re in today — and ask them if they’re willing to trade in all the benefits they got from those other regulations?
The trouble is, TD is misrepresenting the debate. This is not about keeping regulations off the telcos, it’s about keeping regulations off the market, and that is the key distinction. My reply explains why:
Just a couple of facts to get in the way of [TechDirt’s] logic. Cable companies are responsible for 60% of the residential broadband internet connections versus the 40% provided by telcos. The cable network was not built with government regulations. It was built with private investment and initiative.
The common carrier laws that applied to telcos did not apply to cable and cable flourished. In fact, it was only because cable began pushing broadband service that the telcos decided to provide DSL. Telcos sat on that technology for years, opting instead to charge more money for T-1 lines. The competitive market for broadband was created by people who wanted to do more.
If you’re going to point to the technology stagnation that occurred under government regulation of the telcos as an example of successful regulations, you might think again.
Broadband is where it is today because of free markets, not in spite of them.
The phone companies had a pretty sweet gig. They made a killing off of T-1 lines, and little margin off of DSL. So rather than sell more units at a lower cost, they sat on DSL and pushed T-1s.
Cable began looking at broadband deployment in the early 1990s. Unfortunately, the unintended consequences of the 1992 Cable Act (with price controls and overbearing regulation) led revenue to stagnate and investment to dry up. We would have moved toward broadband through cable years earlier if Congress had stayed out of the way.