August 30, 2007

Regulate Telecom!

To show the superiority of free markets, I frequently cite telecom (and, of course, the iPod) as examples. So does Mayor Giuliani. When Larry Kudlow asked him about health care he said "How did we make cell phones affordable? We let the market work."

I have to compliment my collectivist foes on strategy. If they can ruin the markets where the markets work, Classical Liberals will no longer have any examples. So, the FCC and a consumer group have decided it's time to regulate the most successful free market in my lifetime.

WSJ Ed Page (paid link):
In a hearing last month, the Consumers Union told Congress that "in Europe and Asia, wireless consumers have better choices" and that "instead of innovating, the wireless community has become a cozy cartel of a few dominant providers with limited device offerings." More recently, the FCC slapped "open access" requirements on a valuable block of spectrum to be auctioned off early next year. FCC Chairman Kevin Martin justified the move to "ensure that consumers benefit from innovation and technological advancements."

But consumers are doing just fine, according to an American Consumer Institute study released last week. Comparing U.S. and foreign telecom markets, it concluded that the U.S. market "offers more choice and is less concentrated than any Western country's wireless market." U.S. consumers have access to more wireless operators and more devices than consumers anywhere else in the world. And the top three wireless providers in the U.S. comprise a smaller share of the market than their counterparts in Europe and Asia.

Americans on average use more than four times as many wireless minutes per month as Europeans, according to the study, reflecting the fact that "U.S. wireless prices are the lowest in the world, with the exception of Hong Kong." This combination of higher usage at lower prices, it says, "presents compelling evidence that the overall consumer welfare derived from wireless service is higher in the U.S. than internationally." In short, calls for more telecom rules and regulations are a solution in search of a problem.

Now, if the Senate could dictate the size and cost of MP3 players...

Technology Posted by John Kranz at August 30, 2007 11:15 AM