February 24, 2014
Some editorial writers condemn supporters of telecommunications reform for being driven by a profit agenda. However, no company remains in business without “profit” as its primary motivation.
Those editorial writers would find themselves in unemployment lines were it not for subscribers purchasing newspapers containing advertisements paid for by profit-driven advertisers – all designed to create even greater profits.
Why, then, is it unacceptable for telecommunications companies – some of the Bluegrass State’s leading investors – to vigorously attempt to eliminate antiquated government regulations that directly oppose their profit agendas? Only as these companies are profitable can they continue to offer the technology that improves lives and increases opportunities.
We’ve seen the newspaper industry in recent years fight hard in Frankfort against proposed regulations that would harm its bottom line. Why, then, should some in that same industry begrudge another from doing the same?
Telecom companies will continue to invest in the commonwealth, but where that investment ends up is of upmost importance.
Kentucky’s current antediluvian regulatory policy results in too many of those invested dollars being lost by forcing companies to wade through an underbrush of onerous and totally unnecessary government regulations that other states cleared out long ago.
For example, Kentucky forces telecom companies to provide expensive landline telephone service to anyone who demands it – even though such service will be obsolete in the next five years.
Could such intrusive and heavy handed rules contribute to the fact that AT&T’s investment of $1.3 billion in Indiana between 2010 and 2012 was twice what the company invested in Kentucky during those same years?
Rather than being forced to build outdated landlines, providers simply want the option of making basic service available using a different approach that would employ a traditional wireline infrastructure or utilize wireless or broadband technology.
Think of it as basic service but in a more economical manner.
“Every dollar that we put into building out that old network to that new location is going to be stranded – it’s going to be gone,” Hood Harris, president of AT&T Kentucky, told me. “Those are dollars we can’t put into making your cell-phone signal stronger, or into providing new broadband infrastructure that can bring new business and economic opportunity to Kentucky.”
Profit actually is the market’s signal that the company is providing the goods and services that consumers are demanding. For a telecom company, that means investing in new technology that its customers are demanding versus old technology that consumers are leaving.
Legislation passed by the Kentucky Senate and sent to the House of Representatives offers reform with a caveat: If a customer tries the new approach and wants to switch back, they can.
That’s more than reasonable.
Now, it’s time for some reasonableness on the part of the scaremongers and propagandists who prey on fears of the elderly and poor by telling them that telecom reform will leave them out in the cold without basic phone service.
“Don’t pull the plug on basic phone service,” read the headline of a recent Lexington Herald-Leader editorial defending the status quo.
Not only does the editorial completely ignore any mention of the impact that failing to reform our telecom policy would have on future investments in Kentucky’s wireless infrastructure, but the presumably educated headline writer apparently doesn’t even know that a “plug” is no longer even needed to access basic phone service.
Heck, you don’t even need a wire to call “911.”
But telecom companies do need the freedom to invest their dollars in ways that meet customers’ growing demands. They should be free to leave off the old for the new and become even more profitable – as soon as possible.
Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at firstname.lastname@example.org. Read previously published columns at www.bipps.org.