It is in this context that the U.S. Congress needs to rethink national communications policy. When formerly regulated competitive network industries were completely deregulated, as was done with railroad, airlines, trucking and natural gas during the 1970s and 1980s, each of those industries immediately went through a period of accelerated innovation, productivity gains and lower consumer prices. This is precisely what needs to happen to the U.S. telecom industry.
The telecommunications sector is no longer limited by state borders. That's why the trend in communications policy has moved toward uniform rules and a national deregulatory framework to encourage competition and innovation.
Telecom reform legislation recently adopted by the House and now being considered by the Senate would reduce the overregulation and overtaxation of telecommunications. Both bills promote more competition among video service providers by allowing them to obtain a national franchise instead of enduring the burdensome process of obtaining thousands of local government franchises.
Similarly, the Senate bill creates a national policy for wireless telecommunications by freeing both consumers and wireless companies from the current patchwork of 50 different sets of state regulations, which has the effect of limiting innovation and consumer choices. The Senate bill also calls for a three-year freeze on new discriminatory state and local wireless taxes, which have increased 10 times faster than taxes on other goods and services between 2003 and 2005.
Rather than let free competitive telecom markets work their magic, some Senate Democrats want to subject the Internet to so-called "net neutrality" rules - the same types of economic regulations that have cost consumers and investors billions in unnecessary costs and losses since the industry went bust in 2001.
Given what's at stake, that clearly is a disservice to the economy and the country. It's also a primary reason why the fortunes of the U.S.
telecommunications industry need to be decided in the marketplace, not by the government.
Jack Kemp is the founder and chairman of Kemp Partners. Cesar Conda, a former domestic policy adviser to Vice President Dick Cheney, is a consultant to several telecommunications firms and co-author of this article.