April 02, 2004

Mandated Telecom Competition

The Bit Bucket fires off at the idea of mandating competition in private telecommunication infrastructure. While that's all well and good, it's a blinkered approach to what has been a long-standing problem. We need to go back to the root cause to understand why the free-market community seems to be divided up between pro-managed competition and anti-managed competition factions regarding telecommunication.

The original problem is the monopoly that companies have to use public lands to string up their wires. Once you grant such a monopoly, all sorts of bad things follow and government attempts to undo the damage by 'mandating competition'. The long-term cure is to undo the monopoly and allow multiple vendors to string their cables wether copper or glass.

But building networks takes time. How do you provide relief from the bad consequences of monopolies sometimes granted over a century ago? I don't think that mandated competition is a great idea but as a phase in the transfer over to fully built out competitive networks, it's not an abhorrent transition phase.

The key in these transition phases is not whether they are good solutions, by definition transition phases must only be less bad than the previous phase and facilitate the next phase which will be even better. So what is the prior phase, what is the subsequent phase, and does this transition phase meet the criteria of a good transitional solution? It's this sort of comparative examination of incremental solutions that marks the difference between the practical politician and the impractical ideologue.

The pro-managed forces believe that this will be a useful stepping stone up from the current state and allow companies to get revenue and profit which will be plowed back into the creation of the parallel networks that need to end up being built. The anti-managed group thinks that we're going to get stuck here forever in this bastard middle ground between socialism and the free market whose closest historical antecedents are fascism.

In the end, I think the incumbent carriers and their technical tricks will drive their competitors onto their own networks. When a customer is getting service from a provider without a network, he's getting a lower class of service because he has to guess which provider is at fault with every outage. Is it the physical line provider or the network provider running over the line? But the anti-managed competition group gets a lot of good points in along the way and any managed competition plan should seriously address the problem of enforcing the movement off the shared network route to parallel networks.

I would suggest that a forced savings plan be put into effect for companies using shared networks and that money be put into private accounts and when a sufficient amount has been gathered, they virtual network companies are required to build out their own network.

Posted by TMLutas at April 2, 2004 10:51 AM