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Thursday, October 14, 2004

Ownership, Investment and the FCC
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Property has remarkable qualities. For instance, with a property right, the rights-holder might put the property into the stream of commerce, entering into contracts with other parties to use or transfer the right. A key in this bundle of rights is the ability to derive and realize economic benefit from what you own. Thus, parties will invest in and improve their property when they perceive the opportunity to realize gain from it.

Nearly 230 years after Adam Smith's Wealth of Nations identified this point, the FCC has taken a token step to acknowledge this truism. Today, the FCC "clarified" the Triennial Review order that fiber-to-the-curb (FTTC) installations by the Bells are not required to be unbundled; that is, the FCC recognized that the Bells have property rights in fiber they deploy both into the home (this was done in the original Triennial Order) and, now, to the curb (somewhere outside, but near, the home). In its press release, the FCC said:

Today's action builds on those broadband principles, and relieves incumbents from unbundling requirements for fiber-to-the-curb (FTTC) loops, where fiber is extended within 500 feet of a customer's premises. The FCC found that FTTC networks can deliver many of the same benefits as FTTC loops. FTTC networks offer enhanced capability for providing advanced services, including the ability to offer voice, multi-channel video, and high-speed data services. The new rules free companies to choose between FTTH or FTTC networks based on marketplace characteristics, rather than disparate regulatory treatment.

The reaction has been swift and predictable (almost as if one could anticipate this was going to happen...hmmmm). SBC announced immediate expedition of its investment plans from a five-year time horizon to a two- to three-year horizon. BellSouth announced plans to increase its homes-passed plans by 40%.

All this through the simple declaration that if you buy something (like a fiber optic cable), you own it, and get to derive the economic benefits from it. Property rights...all the cool regulators are embracing them, even if it is under implicit threat from the D.C. Circuit.

posted by Ray Gifford @ 1:54 PM | General

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