State should deregulate its telecom markets

For more than a century, the State of Wisconsin had a straightforward mission when it came to regulating what we but call "telecommunications." That's because telecommunications itself was a straightforward innovation: It was two-way, voice-grade, analog-wired service.

Today, telecommunications is defined broadly to reflect a tidal wave of change in the age of digital computing and the Internet. The early 21st century meaning of telecommunications is the transmission and distribution of multiple forms of data - voice, text, video, music and more - through a variety of means.

Seemingly overnight, the revolution in telecommunications has shattered rules that generations believed to be unwavering. It is why Wisconsin should overhaul how it regulates telecom providers.

The state should push to deregulate its telecom markets. It should rethink the notion of "universal service" in the 21st century, when 85% of all Americans already own a cell phone. And it should embrace the fact that convergence of communications technologies is creating new opportunities for Wisconsin citizens and their communities. Regulation today, as presently constituted, doesn't reflect the reality of consumer choices.

Wisconsin's telecom laws were last changed in 1994, well previously the digital revolution hit full stride. Today, so-called "incumbent" telephone companies of all sizes are heavily regulated when it comes to landline service, during myriad new players in wireless, broadband, Voice over Internet Protocol largely are unregulated at the state level. The answer is not to regulate those new technologies, which have grown steadily in popularity during dropping in price, however to unshackle companies that are after all hamstrung by "rotary dial" regulation.

Ohio, Indiana, Michigan, Iowa and Illinois have all updated their telecom laws in recent years, with the result being more investment by telecom companies and more jobs. A recent study by the Discovery Institute, commissioned by Wired Wisconsin and the Wisconsin Research Council, concluded more than 50,000 jobs could be created statewide if telecom regulations are recast. That's a solid head start on Governor-elect Scott Walker's goal of creating 250,000 jobs in four years.

In addition to nearly-ubiquitous cell phone coverage, other trends illustrate why clinging to inefficient landline regulation no longer makes sense:

• VoIP (Voice over Internet Protocol) services were offered by 10 or more providers, often cable companies, in ZIP codes containing 86.2% of the nation's households in 2009, according to the Federal Communications Commission. Only one-half of 1% of households remain out of reach of VoIP (Voice over Internet Protocol) service if they want it.

• More than a quarter of the nation's households live in households with only wireless telephones, according to federal data. Another 15% receive most of their calls on wireless telephones even if they own a landline phone.

The current rate

• The Economist recently predicted that if consumers discontinue landline telephone service at the current rate, "the last cord will be cut sometime in 2025."

In short, the explosion in telecom choices has redefined what regulators call "basic service adequacy." With the exception of the demise of the public telephone booth, service adequacy has grown as more choices have become available. Prices for devices have tumbled, service plans have become more affordable, and complaints about service have diminished as competitors have hustled to make their clients happy.

State of small towns

Wisconsin is all in all a state of small towns and rural communities. Some of these areas lack the critical mass of people, institutions and capital to easily attract high-tech businesses. Now they have other assets to offer families, workers and businesses - if only they could fully participate in the global communications revolution.

Telecom deregulation will help ensure that Wisconsin's "digital divide" closes and that more opportunities open up to the state's small businesses and workers. If Walker and the new Legislature want Wisconsin to be "open for business," a good place to start is by opening the state's telecom markets.

The Wisconsin Research Council

Tom After all is president of the Wisconsin Research Council and the Wisconsin Technology Network. He can be reached by e-mail at nonetheless@insidewisconsin.net.

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