So what, you say? It amounts to the deregulation of DSL, through the vehicle of saying that phone companies no longer have to share their phone lines with competitors. It puts DSL on more equal regulatory footing with cable, in the wake of the Supreme Court’s Brand X decision earlier this year that negated the open access for competitors mandate.
This is huge, and hugely good. As usual, Ray Gifford has clear and cogent commentary on it:
For this, the Chairman deserves congratulations, not just for the regulatory parity it will achieve, but the Schumpeterian incentives it creates.
It is peculiarly foreign to the regulatory mindset that you only invest in those things where you believe you will be able to earn back and keep the profits from that investment. In capitalist parlance, we call that a property right. This Order acknowledges that.
Some folks are nervous that this ruling means more entrenchment of big old phone companies and less opportunity for competing resellers who lease their wires. I prefer to see it as the removal of a regulatory mandate that forces property owners to let others use their property for a fee.
Sonia Arrison agrees with me on this, and points to the vibrant reseller industry in cell phones, which has not been hampered by the lack of an access mandate. I should also mention here that I am thrilled to find that Sonia has set up her own website, yay!
If you define property rights clearly and reduce transaction costs, sharing and reselling may still happen. But it will happen in a more economically efficient and dynamic way.
Another good commentary comes from Tim Lee at Technology Liberation Front:
In any event, if your goal is to spur investments in new infrastructure, the first step must be to insure that the company that invests capital reaps the profits from that investment. It’s hard to see how “open access” rules could possibly accomplish that. Once the dust has settled from the well-deserved death of “unbundling,” we should have a thorough debate about how best to lower barriers to entry to the broadband market, so that companies can more easily build infrastructure (especially wireless infrastructure) to compete with the incumbents. But the debate must start with the principle that the government should respect the rights of companies who invest in infrastructure to profit from their investments, rather than “unbundling” them and giving “access” to other companies who have not bothered to make such investments.
Question: for you electricity folks out there, do you see any lessons here that we could apply to the putative lack of transmission investment in electric power? We’ve had open access rules since Order 888. We had investment problems before then, but you could argue that the open acess tariff in electricity transmission reduces the incentive to invest in high voltage wires.