What Really Helps Consumers?
For those who can remember the 1980s, think back to what phone service was like in those days. Remember the high prices? Remember the lack of choices? It's doubtful anyone recalls these things with fondness. Today talking to friends and family across the country is easier and cheaper than ever thanks to competition in the telecommunications market. It's a mystery, then, why some in Columbus are using the pretext of "protecting the consumer" to prevent even greater competition.
Over the past decade Ohio has gradually allowed more competition in its phone market. At each step in the process, self-appointed "consumer advocate" groups opposed pro-competition legislation with warnings that it would lead to higher prices and worse customer service. Legislators enacted the legislation anyway and the problems predicted never materialized.
Why are these consumer advocates' predictions so flawed? It's because they both ignore history and misunderstand how the market works.
I'm just barely old enough to remember the time when making a long-distance telephone call was a big deal. When I was a child I was forbidden from making phone calls to my cousin, who lived about 45 miles away, because long-distance calls cost too much.
Today, though, making a long-distance call is no big deal. On landline phones, long-distance calls cost a few cents a minute. Many people pay a flat rate to make as many of these calls as they want. For the millions of people in this nation who only have cell phones, there is no such thing as a long-distance call.
This change happened because there was massive deregulation of the long-distance and wireless communications market at the federal level. Companies, spurred on by fierce competition, tailored their products and services to meet consumers' needs and dropped their prices.
Some aspects of landline phone service are regulated by the state, though. These were unaffected by federal legislation and must be addressed on a state-by-state basis. Ironically, in Ohio those who purport to stand for consumers have led the effort to prevent local telephone market from undergoing the same type of pro-consumer changes being experienced in the long-distance and wireless markets.
For instance, Janine Migden-Ostrander, the taxpayer-funded Ohio Consumers' Counsel, contends that pro-competition legislation is bad for rural Ohioans, who do not have as much access to cell phone service. It's unclear why every Ohioan should be deprived of the benefits of competition merely because a few are unable to take advantage of it, but Ms. Midgen-Ostrander does have a point that rural Ohioans have less choice in technology.
The way to help spread technology to underserved areas of the state, however, is not to lock in the situation we have today. As we have seen with cell phone service and broadband service, both of which are less heavily regulated than landline phone service, over time technology does make its way to rural areas. Through competitive pressure, technology companies expand service to reach rural customers. Keeping barriers to technological innovation in place like Ms. Midgen-Ostrander wants will only prevent or delay rural residents from accessing it.
There will always be those who cling to their views regardless of how much history has proven these views wrong. Most of the time this is pretty harmless. But when consumer advocates ignore history and continually oppose efforts to help consumers through competition, then there are real consequences for Ohioans. Less government interference in the telecommunications market has led to lower prices and greater innovation. How can something be more pro-consumer than that?
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
