Wednesday, November 23, 2005 - The Progress & Freedom Foundation Blog

On Thanksgiving Eve--Wars To Be Thankful For

On Thanksgiving Eve, we have a lot to be thankkful for. I always make a point of reading the Wall Street Journal's two lead editorials, "The Desolate Wilderness" and "And the Fair Land", reprinted each year. [Subscription required, of course.] In the midst of war abroad and discord at home, good reading.

In addition, in today's WSJ, there is a story about a war we can appreciate, even be thankful for. Like so many others these days, the story is entitled,"Cable vs. Phone: Giants Escalate Fierce Turf War". It's all about the raging battle in NY between Cablevision and Verizon for customers for video, Internet, and voice services. As Verizon rolls out its new fiber-based video services, some of the tactics in this "fierce war" for customers are not pretty.

But here is the main takeaway from the story. No surprise, amidst the war, that the WSJ reports: "Meantime, consumers already have begun to benefit. Verizon dropped prices for phone services after Cablevision announced it was boosting its broadband speeds at no extra charge to subscribers." And so forth.

Obviously, there is a need to reform substantially the local franchising process in order to speed the competition that benefits consumers. Neither the telcos or cable companies need any longer to be subject to the existing process. But for today it is enough to be thankful for the telecom wars on the home front.

PS--Amidst all the cable-telco fighting for customers these days, I couldn't help but recall some of the wild "the-sky-is-falling"-type predictions made over the years by Consumers Union and the Consumer Federation of America. In 2000, in connection with the impending Bell Atlantic/GTE merger, Consumers Union issued a press release warning that if the merger were approved:

"Cable companies are more likely to focus on television and high-speed Internet, and local phone companies are more likely to highlight telephone and data-Internet services. The result is likely to be comfortable duopolies, which don't challenge each other's core business, rather than aggressive competitors that offer consumers a broad array of new service choices at ever-falling prices." CU Press Release, June 16, 2000.

In 1998, in opposing the Ameritech/SBC merger, Consumers Union and the Consumer Federation of America derided the notion that "breaking down legal barriers to market entry would unleash a barrage of facilities-based competition in which cable companies used their plant to attack the local phone market and local phone companies used their networks to attack cable...The threat of entry by alternative technologies has failed to materialize." Comments of CFA and CU on Ameritech/SBC Merger, October, 15, 1998.

I doubt if any "consumer groups" will eat any humble pie for Thanksgiving regarding their constant, never-ending predictions that regulatory relief will ensure that the communications future holds only monopolies, not more choice, better service and lower prices. But I am thankful that after sounding the same false alarms for so many years, no one pays much attention any more.

posted by Randolph May @ 11:53 AM |