Ohio Policymakers Can Pursue Telecommunications Reform
The basic premise behind Governor Taft's $1.6 billion Third Frontier is to attract and reward those companies that are on the cutting edge. The hope is that this will build a strong job base for Ohioans while at the same time bringing the state's economy into the future through technological innovation. As legislators consider costly new initiatives based on this concept, it is important to understand that there may be a more effective way to achieve this goal.
For instance, part of the Third Frontier includes steps to ensure broadband telecommunications accessibility is widespread. Broadband is a tool that vastly increases communications capabilities by carrying multiple frequencies, from audio to video. Local telephone companies have already invested billions in this service, and the benefits of expanding this network are significant.
In fact, according to a recently released study by the firm Criterion Economics, full broadband deployment has the potential to result in over 15,000 new jobs directly related to broadband and an additional 28,000 new jobs statewide. Economic output gets a boost, as well, as Ohio gross state product could rise by over $15 billion. [1] These are big numbers for a state pushing economic development and working towards shifting its job base to the high-tech sector.
On the national level, full broadband deployment has the potential to create 1.2 million jobs over the next decade, according to a recently released study by the New Millennium Research Council. [2]
One of the biggest roadblocks, however, is regulation. The Federal Communications Commission (FCC) sets the rules by which the telecom industry must abide. Unfortunately, these rules are outdated and remain in a near-constant state of flux. The FCC has issued multiple orders to satisfy the Supreme Court, which has questioned whether the agency is following Congressional intent in its interpretation of the 1996 Telecommunications Act. Companies are unable to plan long-term and act with certainty as they are forced to comply with an ever-changing rulebook.
To begin with, the current framework runs contrary to one of the goals of the Telecommunications Act, which is to promote increased investment in infrastructure. Currently, local providers' competitors are allowed heavily subsidized access to pre-existing infrastructure. The result has been a complete shift away from new investments - and in some cases even maintenance - that is unsustainable in the long term.
The current system has created an environment where rules and regulations that were originally intended to foster greater competition actually hinder it by favoring one company over another. Congress had no way of knowing that today's telecommunications market would be so vastly different. In today's market, consumers have a variety of new choices that were not available to them in the past. Local providers now compete with cable, satellite and wireless companies for consumers' communications needs.
In April of last year, the FCC's issued a ruling devolving a portion of its power to the states. This authority involves increased control over determining whether subsidies are appropriate in certain markets. Ohio policymakers should seize upon this opportunity to create a freer market for telecommunications and a more hospitable environment for investment. [3]
Ohio policymakers can help bring about greater consumer choice and infrastructure investment by encouraging reforms of our nation's telecom laws and taking action where possible at the state level. Ohio's economy cannot help but to be improved by acting swiftly to achieve these goals. Indeed, open markets and freedom from regulation would truly represent a new frontier for Ohio businesses.
Footnotes:
[1] See Wayne T. Brough, Ph.D, State Economies Can Benefit from Broadband Deployment (Washington, D.C.: Citizens for a Sound Economy, 1 December 2003). Available at: http://www.cse.org/.
[2] Stephen B. Pociask, Building a Nationwide Broadband Network: Speeding Job Growth, TeleNomic Research, LLC, 25 February 2002. Available at: http://www.newmillenniumresearch.org/.
[3] Diane Katz and Theodore R. Bolema, Ph.D., J.D., Crossed Lines: Regulatory Missteps in Telecom Policy (Midland, MI: The Mackinac Center for Public Policy, December 2003). Available at: http://www.mackinac.org./
