Telecom Modernization: What it Means for Consumer Choice

By George Klaetsch
March 31,2011

For generations, Wisconsin has been known as a leader in reforms. It is only natural then, that the state would want to continue to lead when it comes to modernizing our current telecommunication regulations.  However, this is not the reality.  Illinois, Indiana, Michigan, Iowa and Ohio have all recently updated their telecommunication regulations, while Wisconsin has failed to act. 

The freedom for companies to invest in new technologies will create a new competitive marketplace. In 1993, Congress auctioned off additional radio spectrums believing that new competitors would materialize. This spectrum is now used by wireless phones, and has resulted in the cost per minute of wireless phone calls dropping from 47 cents in 1994 to 6 cents in 2007. Without the new spectrum, companies would have been paralyzed and unable to invest in the wireless network we have today. Just three years later, in 1996, Congress eliminated cable rate regulation although cable operators retained 91 percent of all subscribers. Congress did this because new competitors from satellite television were becoming more popular. Since the deregulation of the cable industry, companies have invested $145 billion to build two-way interactive networks with fiber-optic technologies. That investment paved the way for more channels and choices than ever before.

Today, landline providers face increased competition from Voice over Internet Protocol providers (VoIP), cable operators and from wireless providers. However unlike VoIP, cable operators and wireless providers, landline providers are handicapped by antiquated telecommunication regulations that were last updated in 1994. According to the FCC, approximately 99.6 percent of the U.S. population, and 98.5 percent of people living in rural areas have one or more operators offering mobile telephone service. The increased competition in other forms of communication limits the ability of landline phone providers to dictate rates or other terms that harm consumers. Comprehensive reform will allow landline providers to improve their products and services, as well as adjust their pricing to respond to their new competitors.

Comprehensive reform allows for more competition, and just as we saw with wireless phone deregulation, costs to consumers will decrease, while choice increases. Continued regulation jeopardizes the ability of landline telephone providers to provide a competitive product and compete in today’s marketplace. A recent study by The Economist predicted that if consumers discontinue service at the current rate, “the last cord will be cut sometime in 2025”, leaving one less choice for consumers.

To find out who your legislator is and contact them regarding this issue click here.

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