MIDLAND – U.S. Rep. John Conyers, D-Mich., hosted a forum today at Wayne State University in Detroit, attended by lawmakers, lobbyists and telecom industry representatives, to consider whether telecommunications regulation has achieved the goals set by Congress in the Telecommunications Act of 1996. By even the most generous appraisal, the results must be judged as unsatisfactory, according to Diane Katz, director of science, environment and technology policy for the Mackinac Center for Public Policy in Midland.

“Rival companies have captured market share from the Baby Bells,” Katz said. “But the competition is largely illusory. Competitors remain dependent on the Bell network rather than developing new facilities that Congress considered necessary to challenge the Baby Bells’ monopoly. This is not meaningful competition that most benefits consumers,” she said.

Deregulation is the most effective method of opening the telecom market, Katz said. Yet, Michigan lawmakers are considering expanding regulation of the telecommunications industry. (For legislative information, see www.michiganvotes.org/4044

“With no real hope of overtaking their network patron, these pseudo competitors instead are lobbying for more regulatory advantages such as ‘structural separation’ of the Baby Bells’ operations,” said Katz. “But government interference in the market is precisely what has inflated rates and stifled innovation for decades,” she said.

Structural separation in Michigan would require SBC and Verizon to sever their retail services from their network operations. The goal is to strip from the companies the benefits of network ownership. Proponents claim that forcing Baby Bells to buy network access under the same rates and conditions as rivals would “level the playing field.”

But, said Katz, “creating what essentially would be a new regulated utility would make the telecom network far less efficient, requiring rate hikes to cover higher operating costs.”

In considering the best course for telecom policy, participants at today’s forum “would do well to endorse deregulation rather than abide by obsolete regulatory approaches that have failed to benefit consumers,” Katz said.

Katz’s most recent commentary on telecom competition is available at www.mackinac.org/5201. The Mackinac Center for Public Policy is an independent, nonpartisan research and educational institute based in Midland.

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