Search:  

 
 
   News
newer
Missouri Explores Deregulation
Latest state to consider lifting state broadband oversight
(old news - 12:20PM Wednesday Feb 05 2003)
tags: legal · competition
As we've mentioned here in the past with stories covering the regulation battles in both Kansas and elsewhere, Missouri is the latest state to find itself wrapped up in the battle over removing all state level regulatory oversight from broadband providers. House Bill 142 and Senate Bill 221 would prohibit the Missouri Public Service Commission from regulating broadband services, with hearings to be held in Jefferson City next week, according to the Kansas City Star. As with the other cases, the regional telcos (SBC in this instance), support the bills and suggest the move fosters investment, while critics charge it will stifle competition.

Related:
  1. Verizon Continues Proud History Of Denial
  2. Small ISPs Want FCC To Ban ESPN 360 Model
  3. Sprint To Sell Portions Of iDen Network
  4. Customer Battles Time Warner Overages
  5. Lawmaker Unveils Anti-Metered Billing Law
  6. The Metered Billing Fight Is About To Get Ugly
  7. FCC Greenlights Centurytel/Embarq With Wimpy Conditions
  8. FCC Cleans Up 'Forbearance' Process
Forums » Missouri Explores Deregulation
view: topics flat text 
Post a:

tiger72
SexaT duorP
Premium
join:2001-03-28
Saint Louis, MO
clubs:
·T-Mobile US
·RoadRunner Cable

Things are good as they are!

Competition is great as it is here in KC! Prices remain pretty low with RR and my comcast friends are loving their service. Dont know about DSL tho. If they deregulate they'll most likely just raise prices, not service.
--
UMKC:15051/20689 kbps RoadRunner:2092/369 kbps

BBC4544

join:2002-03-12
Saint Peters, MO

Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

this is going to be great for MO

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

For MO? Or for SBC?
Pump, pump, pump up your employer some more.

BBC4544

join:2002-03-12
Saint Peters, MO

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

who do i work for: MO or SBC? sorry that is a loaded question. i work for neither.

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

I seem to remember you pointing yourself out as a Bell employee. So, if not SBC, then another BOC.
Whatever the case, what is "good" for one is "good" for the other.
It's called a "precedent", which are what the high-powered lawyers on the Bell payroll are trying like hell to set.
--
The rich get richer, the poorer get the picture, the bombs never hit you when yer down so low...some got pollution, others evolution, there must be some solution but I just don't know....

BBC4544

join:2002-03-12
Saint Peters, MO

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

actually it is CWA doing most of the lobbying in MO for this one. i am sure SBC lawyers have made thier way to Jeff City also. i think this will be good for both MO and SBC. SBC for obvious reasons. For MO in the fact this will open up broadband to more rural areas.

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

For MO in the fact this will open up broadband to more rural areas.
This is a fallacy.
This will not spur broadband deployment to rural areas.
And without competition, the RBOCs don't have any reason to expand or innovate.
--
The rich get richer, the poorer get the picture, the bombs never hit you when yer down so low...some got pollution, others evolution, there must be some solution but I just don't know....

boogie74

join:2001-06-19
Neenah, WI
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

said by BrianDamage See Profile:
For MO in the fact this will open up broadband to more rural areas.
This is a fallacy.
This will not spur broadband deployment to rural areas.
And without competition, the RBOCs don't have any reason to expand or innovate.

Yeah... I forgot that... we'll just take your word for it. Because your "experience" in telecom makes YOU the expert.

Shall we ask Bill Gates why Microsoft keeps innovating and upgrading its products when there is no viable competition forcing them to come out with newer versions of Windows?

Of course, to you that makes no sense- because you've read ALL the laws, regulations and EVERYTHING (memorized it too) in respect to telecom, but not any other field...

I know... you won't answer. You never answered this post. PLEASE QUOTE actual SOURCES of your EXPERT concepts...

Boogie

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

I always answer. You just posted that yesterday afternoon.
Give me a break. You want me to say something that discredits my own argument. I'll leave all of that toe-chewing up to you.
If you are interested in a relevant argument, then give me time to respond. But then again, yo are not interested in anything relevant. You are interested in propaganda.
--
The rich get richer, the poorer get the picture, the bombs never hit you when yer down so low...some got pollution, others evolution, there must be some solution but I just don't know....

boogie74

join:2001-06-19
Neenah, WI
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

said by BrianDamage See Profile:
I always answer. You just posted that yesterday afternoon.
Give me a break. You want me to say something that discredits my own argument. I'll leave all of that toe-chewing up to you.
If you are interested in a relevant argument, then give me time to respond. But then again, yo are not interested in anything relevant. You are interested in propaganda.

But no substantive answer?? Simply responding with insults does not qualify for an answer...

Boogie

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

I put up my answer. Don't go there about insults. You fling them quicker than anyone.
Wise man say:
Make sure brain is in gear before engaging mouth.

ctooley

@swbell.net

Missouri Rural DSL

Actually being originally from a very rural part of Missouri, DSL service was available for us there when I left. It's still not available in all SBC areas here in Austin TX which is supposed to be a Technology city. In fact the DSL service is less than $40 a month at 2Mbit/512Kbit speeds. I challenge any of the major providers to compete with the Co-Op telcos on those price ranges.

I don't think this will have any impact whatsoever on the rural areas. Most of them either don't use SBC (MORENet and things like it) or hate the service they get.

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Missouri Rural DSL

It's still not available in all SBC areas here in Austin TX which is supposed to be a Technology city.
Well, here's what I can tell you about that.
I was the Senior Field Network Engineer in the Austin/San Antonio, Texas market for Covad from 1998-2000, and ran those deployments for them.
In Austin, we built out just about every CO in the metro area, including Wimberley.
Covad had a large footprint in Austin. San Antonio was a little harder to get started (it's the lion's den, after all), but there, we built out most COs except for the ones in the lowest income areas.
Of course, I haven't been involved with Covad in Austin since the summer of 2000, but I have followed what they have done since and stayed in contact with folks that I still know there.
I know that Covad did pull out of many COs in many cities, as part of their restructuring.
But, for the COs that had 200 customers or so, the concensus would be to stay in them. Those with less than that were not logical to keep.
This is not to say that these COs were in areas that were economically disadvantaged or anything like that, but for whatever reason, were slow to subscribe, and Covad had to focus on areas where the subscription rate was higher.
I have remained in the broadband industry all this time, and I have seen the trickle-down of the effects of the downsizing, bankruptcies, and restructurings that have occurred and have seen how they affect consumer's choices.
The logic is pretty simple. SBC, for example, only started offering DSL in areas where some CLECs were doing so only in an effort to thwart their efforts, not so much that SBC saw any profit potentials there.
With the CLECs gone or otherwise removed from an area, the ILECs see no reason to continue their services there either.
This should be a sign of things to come for people.
I mean, this only demonstrates that if there is no competition in an area from a direct competitor/provider (and not a reseller), that the RBOC/ILECs have no real incentive to offer services either, and they likely won't, despite whatever promises they continue to make.
SBC has gotten the regulatory relief they want in Oklahoma already, but there is no proof yet that they have spent any money on the deployments and RT upgrades and such that they assured the state that they would.
With the environment in place, there is no reason for them to do so, and nothing to say when it is shown that they won't.
The point is, without competition, there is no incentive to innovate. Without regulation at either the federal or state level, there is nothing to do to stop the economic tyranny that will follow. The Bell companies will be entirely free to do whatever they want, how they want, and when they want, and that does not ensure ANY advances in technology or availability to consumers. On the contrary, the only thing that it ensures are less choice, higher prices, and continued monopoly.
--
The rich get richer, the poorer get the picture, the bombs never hit you when yer down so low...some got pollution, others evolution, there must be some solution but I just don't know....briandamage@dslr.net

BBC4544

join:2002-03-12
Saint Peters, MO

can you explain why so many remote terminals are being turned up in OK? can you explain why SBC has pumped 30 million into the pronto project in OK immediately after getting relief? i see what is going on in OK and i assume this will happen in MO. i am not trying to be a smart ass i am trying to understand your point of view. please respond

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

SBC has not pumped 30mil into RT turnups or into Pronto in OK. I'd like to see proof of that.

BBC4544

join:2002-03-12
Saint Peters, MO

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

i remember seeing an article on this website about SBC putting 30 million into OK. i do have to earn a living so i may not be able to find and post the info in the next hour. please allow me some time.

BBC4544

join:2002-03-12
Saint Peters, MO

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

»SBC Plans DSL Expansion

this was posted by army5 on another thread

Tom, since you live in Kansas you may not be aware of what has happened here in OK. SBC has already deployed DSL to 5 new towns after the legislative decision.

i am trying to confirm this so it may take a little time

thanks for your patience

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

Yeah, tell that to your cohort, Mrs. Boogie.
army5

join:2002-04-30
Oklahoma City, OK

said by BrianDamage See Profile:
SBC has not pumped 30mil into RT turnups or into Pronto in OK. I'd like to see proof of that.
Let me list the 5 new towns that SBC committed to turn up by EOY 2002 in response to the relief:

Mustang
Henryetta
Sallisaw
Blackwell
Cushing

There is more, would you like for me to go on?
--
Setting a goal is good. Achieving it is awesome.-Author Unknown

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

So are they hot yet? It IS 2003, after all...

boogie74

join:2001-06-19
Neenah, WI
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

said by BrianDamage See Profile:
So are they hot yet? It IS 2003, after all...
Ummm... yes. BTW, exactly WHAT are your qualifications that make you such an expert? You're arguing with people that CURRENTLY work in the industry. Having experience from 3 companies that fired you 4 years ago doesn't quite match up.

You really have missed out on a lot since you've been out of the loop.

Boogie

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

Remove foot from mouth, now.
So what makes YOU such an expert? Because you work for Ameritech in the switchroom?
You don't know as much as you think you do, and leave your arrogance at the door.
I haven't been fired from any company. Quit assuming, because you know what they say about assuming, and you have no problem making that saying come true where your own position is concerned.
And, I still work in the Telecom industry, for a company that is involved in many things, not the least of which has been recently working alongside a wireless manufacturer to develop a NLOS fixed wireless product, working in both the ISM and MMDS spectrums, in varying frequencies, that will provide wireless communications past 12 miles.
Secondly, I have worked in the actual development and deployment of hardline DSL, and also in many other areas.
So, you can continue to try to discredit me all you want, but you are spinning your wheels.
I know, it's the old standby....if you can't debate with someone or "win", then to try to discredit them is the next logical step, so that other people may doubt ones' credibility.
Nice try. Stick to trying to debate.
I will tell you that if you continue to resort to such childish shenanigans then I will be done with you altogether. If you want to grow up and debate like an adult, then I will be happy to continue to engage you.
--
The rich get richer, the poorer get the picture, the bombs never hit you when yer down so low...some got pollution, others evolution, there must be some solution but I just don't know....

boogie74

join:2001-06-19
Neenah, WI
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

You have changed your story 3 times now- claimed to be a telecom law expert (and proven wrong), claimed that UNE-P loop price average nationwide is $32 per month, and you have proven to EVERYONE that you haven't a clue what you're talking about.

So stop debating. I don't even know why I bother answering you.

Boogie

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

I won't dignify that with a response.

boogie74

join:2001-06-19
Neenah, WI
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

said by BrianDamage See Profile:
I won't dignify that with a response.
Thank GOD you've shut up about this!

BrianDamage
We Are The Hounds From Hell
Premium
join:2001-08-14
Rowlett, TX
clubs:

Re: Yeeeeaaaaaahhhhhhhh!!!!!!!!!!!!!!!!!!

God has nothing to do with this.
I have made my points, and you resort to childish shenanigans.
It is obvious that you never took a debate class.
You have just shredded the last little bit of worth you had. I won't debate with such childlike types.
--
The rich get richer, the poorer get the picture, the bombs never hit you when yer down so low...some got pollution, others evolution, there must be some solution but I just don't know....

David
Last man standing
Premium,VIP
join:2002-05-30
Granite City, IL
clubs:
·magicjack.com
·AT&T Midwest

From this side of the state

Things could change, personally I would loath to see the cable company regulated. Not speaking from an SBC standpoint but, if that smelly guy comes up one more time to my door attempting to sell me cable...

I am tempted to spray him down with bleach water till I kill the smell..

Sorry folks, if you don't as least shower at least, that is just nasty in my book..

I'm sorry
--
11/02/01- The day I went into surgery. 1:45 P.M. the day I will never forget, life changed, forever. Today 11-2-02, Current weight 346.3, Total loss: 237.7, 18 inches less on my waist, noticing that I am 1/2 size? I wouldn't give this up for the world

David
Last man standing
Premium,VIP
join:2002-05-30
Granite City, IL
clubs:
·magicjack.com
·AT&T Midwest


He knocked on my door yesterday!!

I just about got to the door and to my suprise (of my nose of course).....


The smell!! He's back!!!



I did not answer the door, for fear that I would become soiled myself. Since I said this last week he returned!!


anyone have a pressure washer (preferrably 2000 PSI or better) to use on my smelly person??



I regulate you to take a shower you bum!!


[text was edited by author 2003-02-09 13:05:06]
hysteria1

join:2002-11-29
Saint Louis, MO

bad idea!

This is a bad isea. Everything should have some sort of regulation or it gets out of control. It is hard enough to get a fair shake from these corporations with the regulation in place. How will it turn out for an average consumer like me if these giant corporations are deregulated and can in essence do what they want? Anybody remember what happened out west when the power utilities were deregulated? Prices sky rocketed and the average consumer experienced a 200% increase in their monthly bills! Not to mention, where will a consumer turn if he is getting jacked around and all othet pursued avenues turn up nothing?
Bad idea! Bad idea!
--
Just because you think they're out to get you doesn't mean they're not!

Eat Me

join:2002-09-25
Sussex, NJ
·Future Nine Corpor..
·VOIPo
·Vonage
·PenTeleData

Re: bad idea!

said by hysteria1 See Profile:
This is a bad isea. Everything should have some sort of regulation or it gets out of control.
Why should it? So that companies can wait for years for approval from the feds or state authorities for something which can be done in a few weeks?

I hate communism socialism regulation. Regulation is wasting tax money, and when the government wants more to waste, they raise taxes.
hysteria1

join:2002-11-29
Saint Louis, MO

Re: bad idea!

"Why should it? So that companies can wait for years for approval from the feds or state authorities for something which can be done in a few weeks?"

If need be, yes. Anyway, nothing gets done in a few weeks, not on the scale that we are talking about.

"I hate communism socialism regulation. Regulation is wasting tax money, and when the government wants more to waste, they raise taxes."

Nothing is 100% efficient, but this regulation was put in place for the benefit of the consumer in mind, which brings me back to my original point, who will be there for the consumer when all else fails? I agree taxes and regulation are not perfect, but nothing runs for free. It is called capitalism, one of the foundations of this great country. You use terms like communism and socialism sparingly like you know what life is like in an eastern block country! Please!
--
Just because you think they're out to get you doesn't mean they're not!

lazarus_

join:2002-08-31
Resolute, NU

said by Eat Me See Profile:
said by hysteria1 See Profile:
This is a bad isea. Everything should have some sort of regulation or it gets out of control.
Why should it? So that companies can wait for years for approval from the feds or state authorities for something which can be done in a few weeks?

I hate communism socialism regulation. Regulation is wasting tax money, and when the government wants more to waste, they raise taxes.
From what you just posted I gather your probably a very stupid person. I have no clue why the hell you even posted.. Read the guys COMPLETE POST you illiterate moron or maybe you have ADD and cant handle reading posts more than 2 sentences long... And where the hell did you get communism from you stupid f@g?? Stuff is regulated so that huge companies are forced to follow rules and guidelines to protect the little guys (small companies and customers)

Go back to school you stupid hick, and if you are in school your a complete moron and should kill yourself.
--
Patriotism is virtue of the vicious

See 7 replies to this post
STLCompGuy

join:2003-01-11
Chesterfield, MO

It would be GREAT for St. Louis

as of right now...only Charter Communications is the cable company in St. Louis. Hopefully we will have a choice in cable and broadband cable if more companies move into St. Louis

morbo
Complete Your Transaction

join:2002-01-22
00000
clubs:

Re: It would be GREAT for St. Louis

a choice would be great. anything but charter please.
[text was edited by author 2003-02-05 15:14:15]
rradina

join:2000-08-08
Chesterfield, MO
How would de-regulation entice more companies into the St. Louis area?
STLCompGuy

join:2003-01-11
Chesterfield, MO
why do you think St. Louis only has one cable company in town?

Carbon Unit
Premium,MVM
join:2001-07-21
Saint Charles, MO

Missouri

Maybe we can get some fiber in this state, maybe in this decade
gecko901

join:2000-08-12
Saint Louis, MO

Re: Missouri

There is a lot of fiber all over St. Louis county but it is all dark for the most part.

dvd536
as Mr. Pink as they come
Premium
join:2001-04-27
Phoenix, AZ

Re: Missouri

said by gecko901 See Profile:
There is a lot of fiber all over St. Louis county but it is all dark for the most part.
make that america. plenty of fibre in america just laying dark and the telcos aint in any hurry to light it as that would cut into their LUCRATIVE T1 BUSINESS.

ctooley

@swbell.net

Re: Missouri

There's fiber all over the northern half of the state. In fact in a lot of small towns in Northeastern Missouri there's a good possibility that there's a fiber converter on the outside of your home. Many schools in Northern Missouri are using fiber strands donated by the local ILECs (yes ILECs, they've always been the phone company in those areas) for interactive classrooms to share teachers. They've lately been able to network the schools together to pool resources over the same fiber. 16 strands is a lot of fiber for a school to chew up to another school.

bistro777
Donuts-Is There Anything They Can't Do?
Premium,MVM
join:2002-02-07
Englewood, CO

The deregulation debacle - oops, debate..

Sometimes ya jus’ gotta stir things up. So here are a couple of links for strongly-worded (and admittedly one-sided) discussions regarding deregulation:

»www.techcentralstation.com/1051/···-021902D

“The decline in the number of CLECs since the fall of 2000 until recent months led to a stark increase in residential rates for broadband services - from $39.40 in January of 2001 to $51.67 by year's end. And lawmakers and regulators need not even go there. They can simply look at the record of $1.8 billion fines and penalties since 1996 that the Bells have been assessed by regulators for failing to meet their legal obligations - obligations they oftentimes initially agreed to and even helped promote. And (deregulation) won't come as any advantage to rural America, as the Bells are telling members of Congress it will. The Bells have gotten rid of 20 to 30 million rural access lines. They have no intention to go back there without some additional heavy subsidies.”

»www.netaction.org/broadband/bells/

“If the Regional Bell Operating Companies (RBOCs) had delivered on the promises they made in the early 1990s, almost half of America's households and the vast majority of the nation's schools would already be wired with high-speed fiber optic networks. If the Bells had delivered on what they promised, low-income urban neighborhoods and rural communities would have been wired by now, and the digital divide might have been avoided. …There is a significant flaw in the incentive regulation plans adopted by various states. When a monopolist is deregulated before competition takes hold, the result is an unregulated monopoly.”

Yes, Chicken Little, methinks the sky is falling…

Rep. Chris Cannon, R-Utah: "You can't underestimate the amount of knowledge most members of Congress have about this issue." - - Now that's comforting, huh?

See 6 replies to this post

moby866
Premium
join:2000-10-07
Above you

I just want a 10/10 connection

If I can get a super fast connection in my home, I do not care if some small company gets crushed

See 21 replies to this post

BBC4544

join:2002-03-12
Saint Peters, MO

dead remote terminals

there are a lot of remote terminals that are not getting turned up by sbc. what would you propose to get these remote terminals turned up for dsl??

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
·Cox HSI
·AT&T Southwest

Re: dead remote terminals

Easy, just get your State Reps to grant SBC a xDSL / Internet Monopoly, and they'll have no problem turning up those RT's....

... Which we'll still be stuck with in 20 years at 10 times the price while the rest of the world is on MegaGigaBit Access.

--
"When the day comes that anyone can bend our country’s laws and lawmakers to serve selfish, competitive ends, that day democratic government dies" -- Preston Tucker, 1948 (Yep, it's dead.)

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
·Cox HSI
·AT&T Southwest

Look at the list of States being pushed to do this

Oklahoma (Caved)
Kansas
Missouri
Texas.

Now, lemme see, anyone want to mention which one of the Bully Bells holds sway over these states?

Ding! Yes, it's SBC! Big surprise.

Money talks, and consumer's needs walk. SBC's money, in this case.
--
"When the day comes that anyone can bend our country’s laws and lawmakers to serve selfish, competitive ends, that day democratic government dies" -- Preston Tucker, 1948 (Yep, it's dead.)

See 33 replies to this post

LegoPower77
Abecedarian
Premium
join:2002-08-03
Arlington, VA

Regulation= BAD

In this discussion I am stuck by many people's view that government regulation is the only way to protect the consumer against the eeeevil corporations. Two things come to mind. Who pays corporations? That's right, we do, so they better make us happy. Second, how is a politician any less susceptible to greed and self interest? Corporations don't have threat of violence; government does —I'd rather trust the former.

The history of regulation shows that firms lobbied for it when competition reduced their profits. In 1897 the National Electric Light Assn. began lobbying for regulation and for "fair profit" price controls by the various states. The same scenario for the telephone industry (Ma Bell was a product of regulation, you big-governmenters). Actually, the first states to adopt regulation were the ones that had low profits and high output. The effect was to increase price and reduce output.

People make the case for regulation based on the natural monopoly argument. They say that (as in the case of electricity, natural gas, broadband), because of the expense of building such large transmission networks, the natural state of things is to have a few large firms. In order to protect the consumer, the state needs to regulate, usually by granting exclusive license and with price controls that guarantee "rate of return" (ROR for short) profits. The question comes to mind, if these were "natural" monopolies, then why the need to restrict entry?

In a free market —one with no barriers to entry, the "monopoly" firm always would have to guard against upstart competitors seeking a part of their monopoly profit (which is why you'd never see $200/month broadband). In economics, we call this the contestable markets theory, for which there is much empirical support.

The problem with price controls in this case is that they create the wrong incentives for the firm. ROR pricing is based on historical prices, not the current technology. If an industry is unregulated, when there is rapid technological advances, the old facilities become obsolete before their historical cost is fully depreciated. Firms abandon obsolete facilities sooner than if there had been no advancement. But under an ROR regime, the older facilities are protected by the averaging of their cost with the cheaper newer facilities into the rate structure. This has two effects that are exactly the opposite of what advocates of regulation say they want. First, since the older facilities are not abandoned and their cost is averaged with the newer ones, the price does not go down as quickly as it would if the old facility was abandoned altogether (assuming the new technology makes the product cheaper). Second, because of the guaranteed ROR, firms are more willing to try risky new technologies because they are less sensitive to cost overruns and since the consumer is made to pay for it anyway.

Firms operating under regulaton are less motivated to control costs than they would be in a competitive market and they do not abandon their older, inefficient facilities as readily. Prices under ROR regulation are set by adding capital cost and a profit rate to other costs, thereby attempting to reverse the competitive process by which prices determine the amount of capital cost one can profitably afford to incur.

The point of all of this is that it's better to live with a temporary monopoly, subject to free entry, then to have Leviathan with threat of force limiting our choices and stifling innovation.

For further elucidation
--
"Lunches don't get free just because you don't see the prices on the menu. And economists don't get popular by reminding people of that." --Thomas Sowell

See 6 replies to this post
ericvanh

join:2003-02-09
Joplin, MO

regulation, smegulation

it seems to me regulation takes the power of one corrupt organization and hands it to another corrupt organization under the auspices of good will.
Forums » Missouri Explores Deregulation


Sunday, 05-Jul 08:59:14 Terms of Use | Privacy Policy | Hosting by www.nac.net - DSL,Hosting & Co-lo | feedback | contact
over 9.5 years online! © 1999-2009 dslreports.com.republican-creole