Communications Revolution Awaits Regulatory Reform

Patrick Hynes

10/18/2005 12:05:00 AM - Patrick Hynes

I probably don’t need to tell Townhall.com readers that the invisible hand of free-market competition has a way of shoving fat-and-happy industries into providing better products and higher quality services, all at lower prices. 

For example, today curious transformations are taking place in the television business that will utterly alter the way we send and receive our broadcast news and entertainment – for the better.

Consider the following. 

In Texas, the state legislature passed and Gov. Rick Perry signed a law that essentially eliminated a requirement that providers of IPTV (which stands for Internet Protocol Television; TV over fiber optic Internet lines) go door-to-door and secure localized franchise fees from individual municipalities.  Heretofore, the possession of the infrastructure that pipes in the programming and the permission from the broadcast providers to carry their television shows wasn’t enough.  If you weren’t the cable company, you were barred from providing the service.  Since the Cable Franchise Policy Act of 1984, Congress legally recognized local governments’ right to authorize the franchises.  But the new Texas law allows IPTV providers (in this case Verizon) to secure a statewide franchise.  New Jersey is debating similar legislation

As you can imagine, Big Cable fought like hell to stop the regulatory change in Texas. Indeed, they’re still fighting.  Lawsuits are imminent. And Big Cable is lobbying like mad in New Jersey. But the competition cat is out of the bag and it’s going to be awfully hard to put her back in.

Some returns are already in on IPTV.  One anonymous customer in Keller, TX told I4U News that the IPTV “picture is really the best that I have seen ever, even on non-HD channels.”  And at roughly $13 per month cheaper than traditional cable, “the starter channel package is really affordable,” the fellow said.

Better yet, the aforementioned invisible hand has begun to nudge Big Cable into improving their offerings. According to Bill Peacock of the Texas Public Policy Foundation:

“And while the cable industry might not have liked the new legislation, it wasted no time in responding to it.

“Time Warner Cable has announced new services allowing people to track their eBay bids via their cable TV and display Caller ID on the television screen. New technology will allow cable companies to increase their bandwidth and offer more channels to subscribers.

“All this means that prices for video are likely to drop, just as they have in the past with voice and broadband. Additionally, the high tech economy will expand as the competition attracts new capital, spurs product innovation and creates new jobs.”

Big Cable’s response has not been limited to Texas. Peter Grant of the Wall Street Journal reports that cable monster Comcast Corp.  “has 400 software engineers building what amounts to a TV version of the Internet, stocked with movies, archived television programs and other interactive features, including a search function.” The company is even in negotiations with Google to team up to buy America Online.

What does all this competition and change mean for you and me?  Well, to localize it, the time is not far off when you will read an article on Town Hall from your television set (or more likely some form of television-computer hybrid device, which has yet to be engineered) and with a touch of your remote control button or the poke of your stylus, engage in face-to-face dialogue with the author or some other interested reader.  

For as Peacock avers, “While Texans may experience some of these benefits sooner than citizens of other states, the effects of the Texas reform will be felt nationwide.  The timing and extent will depend on when Congress and other states follow Texas’ lead.”

Yes, that’s the clincher. Unless regulations at the federal and state level are reformed in such a way that opens up competition, lower rates, and better service will not occur.  The invisible hand is presently hindered by the handcuffs of outdated regulations crafted in the 1970’s and hardly reflective of the communications revolution, of which we stand at the precipice. Both the U.S. House and the U.S. Senate are considering telecom reform that would address these (and a host of other) issues. As you can imagine, Congressional leaders are being lobbied from every direction.  Where all this ends up will determine how we interact electronically for decades to come.

Patrick Hynes is the proprietor of www.anklebitingpundits.com and blogs about technology at http://www.channelchanger.typepad.com/.