Telecoms regulation considered harmful
<p>Doc Searls asked me to put the argument for total telecoms deregulation into a nutshell, then blog it so he could point at it.  Here it is.</p>
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<p>Telecoms regulation, to the extent it was <em>ever</em> justified, was justified on the basis of preventing or remedying market failures &mdash; such as, in particular, lack of market incentives to provide universal coverage.</p>
<p>The market failures in telecoms all derive from the high fixed-capital costs of conventional wirelines.  These have two major effects: (1) incentives to provide service in rural areas are weak, because the amount of time required to amortize large fixed costs makes for poor discounted ROI; and (2) in higher-density areas, the last mile of wire is a natural monopoly/oligopoly.</p>
<p>New technologies are directly attacking this problem.  Wi-Fi, wireless mesh networks, IP over powerlines, and cheap fenceline cable dramatically lower the fixed capital costs of last-mile service. The main things holding these technologies back are regulatory barriers (including, notably, not enough spectrum allocated to WiFi and UWB).</p>
<p>The right answer: deregulate everything, free the new technologies to go head-to-head against the wired last mile, and let the market sort it all out.</p>
