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Deregulated Broadband

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My colleague Tom Hazlett [2] has this excellent op-ed [3] in today’s Wall Street Journal.  Here are the opening few paragraphs:

We should be celebrating an anniversary this month:
One year ago, in August, the Federal Communications Commission voted to
deregulate residential broadband services. Never heard of it? Well, I’m
not proposing a parade; but this victory for freer markets undermines
the current proposal to re-regulate the Internet via "net neutrality."

First, the broadband situation. Under the "open
access" mandate, the federal government used to be the ultimate arbiter
of what telephone companies could charge independent broadband
providers to use their own physical infrastructure, such as wires and
cables and other network components. But reformers argued that
depriving the telcos of the power to set prices and cut customized
business deals meant they could not attract the investment they needed
for critical but very costly improvements to these networks.

The deregulation debate was acrimonious: Critics
complained that, left to market forces, households would be handcuffed
and gouged by telcos pushing their own broadband services, excluding
competitors and restricting access to Web content. After the vote was
taken, FCC Commissioner Michael Copps challenged his colleagues: "I
hope next year the commission will put its money where its mouth is to
see if the assumptions yield the results. And if it doesn’t, I hope it
will admit that and take appropriate action. I’ll be keeping tabs."

The results are in: DSL packages are cheaper,
performance speeds are faster, and the number of subscribers is growing
more quickly than under open access rules. According to Leichtman
Research, for the nine months following deregulation (fourth-quarter
results aren’t posted), the number of households with DSL increased by
4.6 million — some 31% above the previous period’s growth. Meanwhile,
the DSL competitors — cable modem services — have added 3.8 million
subscribers.

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