The Jefferson Journal

Michael W. Thompson

Keep Regulators' Mitts

off Telecom


Everyone wants to stimulate investment in telecommunications technology and broadband infrastructure. Free markets will do it best. 


Virginia is a leading force in technology and telecommunications in our country and throughout the world. Most email traffic passes through Northern Virginia. Our state government technology efforts are recognized as among the best.


Now Virginia should lead the way in bringing the wonders of the Internet to all our citizens as quickly as possible. Success in this endeavor will add significantly to the growth of our economy in the immediate years ahead.


The development of free markets around the world has shown that keeping government controls and regulations at a minimum spurs tremendous economic growth. This limited role of government put American business at the top of the world market. We must continue to keep the role of government regulation in check. Nowhere is this truer than in telecommunications.


The telecommunications sector is the key to bringing communities across Virginia into active participation with the changing world economy. As telecommunications changes, grows and morphs in ways that we could hardly have imagined a few years ago, government is trying to figure out how and whether it should intervene.


The pace of change is breathtaking. Hand-held devices are becoming smaller and more versatile, allowing them to be used as telephones, computer terminals and data storage facilities. Satellites provide most of the services we now get from telephone and cable companies. New computer systems are out-of-date almost from the time the owner plugs it in. And some of our neighbors are using Internet connections for their long distance phone calls. While new telecommunications multiply, old services are becoming profitless commodities, as witnessed recently by AT&T's decision to halt commercial promotion in the residential market.


Propelled by the competitive forces of a free-market and huge economic gain, the telecom industry has strong incentives for expanding and improving its current infrastructure. A recent study by Criterion Economics and the New Millennium Research Council showed that “capital expenditures associated with the ubiquitous adoption of current generation technologies will result in a cumulative increase in gross domestic product (GDP) of $179.7 billion and will sustain an additional 61,000 jobs per year.” And this doesn’t include the gains to business and personal productivity resulting from the spread of these technologies.


But achieving maximum growth requires minimum regulatory roadblocks. Creating a free-market environment -- providing telecom companies the freedom to develop and offer innovative products -- is the best way to stimulate the industry and make its services available to a broad population.


Take, for example, the goal of achieving universal accessibility to broadband -- vital to economic growth in Virginia and nationally. Currently, urban areas throughout Virginia benefit from a widespread presence of broadband technology. In contrast, rural areas have seen a slower rate of investment in broadband infrastructure. Without high-speed Internet connections, rural Virginia has little hope of participating in the burgeoning information-intensive economy.


Connecting rural areas with broadband will require huge capital expenditures. Knowing the stakes and frustrated with the slow pace of private investment capital spending, rural municipalities are often tempted to build the infrastructure themselves. But the investment for expanding broadband infrastructure should come from the private sector, not government.


Stimulating such private sector investment can best be achieved by keeping government’s regulatory role to an absolute minimum.  It is important that our legislators establish government policies and regulations that will enable our telecom companies to compete freely and fairly while they deliver greater value to the consumers in the quickest timeframe possible.


Virginia’s rural areas need access to broadband if they are to have the capacity to complete in this fast changing economy. The private sector can and should provide that infrastructure and government must be careful not to mess things up through unnecessary or poorly crafted regulations.


-- August 9, 2004





















Michael Thompson is chairman and president of the Thomas Jefferson Institute for Public Policy, a non-partisan foundation seeking better alternatives to current government programs and policies. These are his opinions and do not necessarily reflect the opinions of the Institute or its Board of Directors.  Mr. Thompson can be reached here