FCC decision protects competition

Last Thursday, Michael Powell, the George W. Bush-appointed Federal Communications Commission chairman, rebuked his board’s decision to uphold some of the regulatory aspects of telephone service. Fortunately for the American consumer, as well as the American entrepreneur, his opinions were not the FCC’s actions. Powell commented the decision “could prove quite harmful to consumers.” However, the decision forces those who own local-area telephone networks, such as Qwest, to lease their lines to competitors at wholesale prices. At first glance this seems unfair, but on closer examination, the reverse is true.

For more than a century, the Bell Corporation owned virtually all telephone lines. However, in 1984 the government deemed Bell a monopoly and split the company into the four “Baby Bells.” In order to avoid regional monopolies, these companies have been required by the FCC to lease their lines to startup companies in order to spur local competition. This requirement has been challenged by the present administration. According to the administration, “just” competition would require local companies to build their own telephone lines above the already existing Bell lines.

Aside from the ridiculous inefficiency of connecting multiple phone lines to the same singular source, cramming our landscape with forests of telephone poles, the barrier to entry for new telephone companies is significantly greater. The costs of building a telephone network from the ground up are much higher than offering a service across already-existent lines. Only colossal corporations with vast financial resources could feasibly penetrate this market.

Had the FCC chairman had his way, telephone companies like Qwest would have a legal monopoly of regional markets and could raise prices at their leisure. And the spirited entrepreneur, with only rags to start, who is so prized by American culture, would be eliminated from the playing field. Thankfully, the FCC’s board members recognized the issues at stake and objected to Powell’s crusade against small American entrepreneurs. Despite rhetoric of “justice” and “freedom against government control,” the realities of our system require such regulation.