Monday, June 19, 2006

Writer suggests threat of eminent domain to spur telcos, cable companies to compete

Maybe the incumbent network providers--the Verizons, Comcasts, AT&Ts--can be made to compete; threatening to seize their stagnating networks via eminent domain is just one creative idea to get them to do this. A truly competitive, non-neutral network could work, but only if we know its real economic value. If telcos or cable charge too much, someone should be in a position to steal the customer. Maybe then we'd see useful services and a better Internet. Sounds like capitalism.
Andy Kessler in The Weekly Standard.

In the public policy realm, this is what would be known as the nuclear option -- a final, overwhelming and extreme solution. Local governments have a number of interim measures they can take to encourage preferred outcomes to serve the best interests of the citizenry or discourage those things deemed harmful to the public interest.

As Mr. Kessler notes, in the wake of the U.S. Supreme Court's recent Kelo ruling upholding local governments' broad authority to exercise eminent domain in the name of economic progress, it wouldn't be a major leap of logic to argue that just as governments exercise emiment domain to acquire rights of way for roads and highways, they might also do the same for telecommunications systems.

Just like roads and highways, these systems are key infrastructure vital to a community's economic health and well being and therefore, it could be reasonably argued, the public interest in them outweighs the financial interests of those who own them.

Local governments throughout the U.S. have already gone into direct competition with telcos and cable companies with their own municipal broadband systems. Perhaps in the post Kelo environment, they'll also begin to consider forming telecommunications redevelopment agencies to take over aging phone and cable systems. A key advantage to this strategy is that it eliminates an entrenched monopolistic provider that refuses to upgrade its systems to make broadband widely available, but by its very presence casts a chilling effect on the market, discouraging the entry of competitors.

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