Telecom experts call for reduced regulation

Current U.S. government communications regulations that create a dividing line between telecommunications and Internet services make no sense and may be inhibiting the U.S. economy, a group of telecom experts said Thursday.

The U.S. Congress needs to pass a comprehensive overhaul of telecommunications law, focused on removing regulations on carriers trying to provide enhanced broadband services such as VoIP, said panelists at a Forum on Technology and Innovation event in Washington, D.C.

Laws that impose regulations on telecommunication carriers need to be repealed when companies that provide so-called information services over Internet don't face the same rules, said Randolph May, senior fellow at the Progress and Freedom Foundation, a conservative think tank based in Washington, D.C. For example, VoIP providers face little regulation, while traditional telephone service providers face significant regulation, May said.

"The distinction between information services and telecommunication services is really quite metaphysical and has nothing to do, at all really, with how consumers in the marketplace look at these services," May said. "[Current communications law] cause so much problem in a digital age where a bit is a bit is a bit, and it's all converged."

While the U.S. government debates ways to encourage broadband adoption, countries like India and China are already acting and growing their IT industries, added John Rutledge, chairman of Rutledge Capital, a private equity investment firm. Rutledge, recently appointed president of the Mundell International University Business School in Beijing, noted that China will graduate more engineers this year than the U.S., Japan and Germany combined.

Large parts of the current U.S. economy are inefficient in creating capital, with high costs in education, health care and government services, Rutledge said. "We need to be aware of the strategies those guys are using, because that's our competition," he said of China and India. "We can either learn how to compete for capital here, or we can learn Chinese. There's a million and a half kids over there working their asses off."

The panel, made of up free market advocates, all suggested less regulation was better, with May saying competition among telecom and Internet carriers was growing almost daily. However, some consumer groups would disagree with his statement, now that SBC has merged with AT&T to form AT&T in November, and Verizon plans to close its acquisition of MCI by early next year.

But May compared the current telecom marketplace -- with independent VoIP providers, cable television providers offering broadband and voice service and telecom carriers launching video services -- to 10 years ago, when the Telecommunications Act of 1996 was being debated.

"There's much more competition in all market segments in the communications world than there was, certainly, 10 years ago," he said. "I would say there's much more competition than there was even two years ago. The fact of the matter is there's probably more than there was six months ago or even six days ago."

May called for Congress to limit the U.S. Federal Communications Commission's (FCC's) power to investigate complaints of unfair business practices by communications companies, instead of its current authority to set broad regulatory policy. In many cases, the FCC acts too late, he said.

"Often times, the market problem ... is no longer relevant because the technology has changed, the marketplace has changed," May said.

While May called for communications regulation overhaul, Charles Davidson, director of the Advanced Communications Law and Policy Institute at New York Law School, called for Congress to streamline video franchising rules, to limit taxes on wireless services, and to limit "unfair" competition to Internet providers from municipal Wi-Fi networks.

"Government should not compete with business as a general matter," said Davidson, who in 2000 was appointed by Republican Governor Jeb Bush as executive director of Florida's Information Technology Taskforce.

Organizations such as Free Press, a media policy group, have advocated municipal Wi-Fi, saying it gives customers more options and could provide price competition to private providers. Senator John McCain (R-Ariz.) has pushed for a bill preventing states from outlawing municipal broadband services, saying municipal networks may be the only broadband option for some rural communities.

The Forum on Technology and Innovation is part of the Council on Competitiveness, a Washington-based group advocating policies that make U.S. companies and workers more competitive in the world economy. Members of the council include BellSouth, Cisco, Microsoft, Red Hat and several large U.S. universities.

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