Saturday, December 02, 2017

FCC Chair Pai's distorted take on America's telecommunications infrastructure challenges

Why deregulating internet service makes sense - Chicago Tribune: FCC Chairman Ajit Pai says CEOs, investors and entrepreneurs are in the best position to invent and give consumers what they want, so they should be allowed to compete. “The No. 1 issue that I hear about is that people want better, faster, cheaper internet access,” Pai told The Wall Street Journal earlier this year. “They want access, period. To me at least, that’s the question the FCC should be squarely focused on: What is the regulatory framework that will maximize the incentives of every company to deploy the next generation of networks?”

This brings to mind the adage that to a carpenter, problems generally appear as protruding nails needing to be hammered down. So it's no surprise that to a regulator, America's telecommunications infrastructure deficiencies are a regulatory problem calling for a sharp whack of the regulatory hammer. Or in Pai's words, an overgrown regulatory thicket of weeds calling for the application of a weed whacker.

The problem is Pai has incorrectly framed both the problem and the solution. America's disparate and costly telecommunications services and particularly those serving buildings where people live, work and attend school are not caused by excessive regulation. In fact, the reverse could be plausibly argued. The Federal Communications Commission current Open Internet rules classifying Internet service providers as telecommunications common carrier utilities under Title II of the Communications Act require them to fulfill reasonable requests for service and not discriminate based on a customer's address. That operates so as to force them to upgrade and build out their networks to honor those requests.

Rather, they are primarily due to overreliance on legacy telephone and cable companies to make the necessary capital expenditures to transition their metallic cable plants to fiber. And to do so at a rapid pace in order to meet the burgeoning demand for connectivity of which Pai speaks. Their business models that require quick profits can't do that because it can take many years to achieve profitability on telecommunications infrastructure that costs many billions of dollars.

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