Written By: Matthew S. Hisrich
Published In: IT&T News
Publication Date: August 1, 2005
Publisher: The Heartland Institute
State economies around the country are likely to improve thanks to
recent legislative action on telecom reform. Ohio, the largest state
to pass reforms so far this year, leads others that have transported
the government's view of the industry into the present.
The reform legislation takes a step toward bringing the Public
Utilities Commission of Ohio (PUCO) up to speed with market realities
by following the lead of the Federal Communications Commission
(FCC). Last year, the FCC overturned much of the regulatory structure
upon which state agencies such as PUCO rested. Recognizing that new
technologies and a vibrant marketplace have transformed the
telecommunications industry, the FCC sought to shift away from
heavy-handed regulatory oversight and price-setting.
In this new competitive environment, Ohio's legislators realized
PUCO's role of 'monopoly czar' is no longer necessary. By
transitioning into oversight of competitive forces already at work,
PUCO will more effectively deliver positive results for consumers and
the economy as a whole.
The legislation further encourages PUCO to recognize these advanced
communications as part of the competitive marketplace when considering
regulatory action. Up to now, agency officials focused solely on
wireline technology in crafting rules. That narrow focus essentially
ignored the many changes taking place around the regulators, including
cell phones, Voice over Internet Protocol (VoIP), wireless Internet,
and the entry of cable and electric utilities into the
marketplace.
In response, state legislators across the country are introducing and
enacting a wave of legislation meant to document the need for
change. Alabama, Idaho, Iowa, North Dakota, Tennessee, and Utah all
signed telecom reform into law.
As in these other states, legislators in Ohio chose to adopt the FCC's
position. In a state suffering from declining investment in basic
infrastructure as a result of below-market price-setting, the need for
a reform was clear. The Ohio House voted 81-13 and the Senate voted
30-2 to adopt the bill.
The legislation encourages investment by ensuring that PUCO follows
federal law in its actions. Requirements or prices for network
elements, resale of telecom services and network interconnections, for
example, cannot exceed or be in any way inconsistent with the more
restrictive federal regulations. And, despite designs it once held to
expand its oversight into this arena, PUCO is now prohibited from
exercising jurisdiction over Internet-based telecommunications such as
VoIP.
While work remains to overhaul the structure of state regulatory
agencies, placing a 'cap' on their jurisdiction based on federal
standards is a necessary first step. Ohio, a state once known for
having a restrictive regulatory and price-setting environment that
undermined competition and innovation, can now begin fostering a
reputation for welcoming entrepreneurial investment.
Matthew S. Hisrich <a href=mailto:hisrich@buckeyeinstitute.org > is a
policy analyst with The Buckeye Institute for Public Policy
Solutions.
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