Professor Hazlett Column on Net Neutrality Published in Wall Street Journal
In The Wall Street Journal's RULE OF LAW Column, Thomas Hazlett, professor of law and economics and a former chief economist of the FCC, reviews the actual marketplace results of "open access" rules in broadband markets, finding that consumers reject the efficiency argument for Internet regulation.
Broadbandits, The Wall Street Journal, August 12, 2006. By Thomas W. Hazlett.
"Average DSL rates, according to Kagan Research, dropped from $39.51 per month in 2002 to $34.72 in 2003. Telcos also expanded the scope, capacity and quality of advanced networks, even improving its endemic customer relations problems.
"Consumers responded. DSL, holding just 35% market share in 2002, pulled even with cable among new subscribers in 2004. Leichtman Research reports that "DSL providers have added more broadband subscribers than cable providers in each of the last six quarters," and that overall, "the first quarter of 2006 was the best ever for both DSL and cable broadband providers." Unleashed from open access, DSL is attracting customers like never before -- and the overall growth of broadband subscribers (DSL and cable) is notably higher.
"In September 2004 the FCC also eliminated network-sharing obligations for phone companies' fiber optic facilities, and deregulation appears to have triggered more investment. In the first quarter of 2006, about 100,000 of Verizon's 541,000 new 'DSL' households actually received lightning fast fiber data connections. The bottom line: Since DSL began to shed its access obligations, users have flocked to the service. By the first quarter of 2006, DSL's subscribership has increased some 60% above its pre-2003 growth trend under access mandates.
"Commissioner Copps was spot on in recommending a market test for deregulation of Internet access. If policy makers heed the results, they will reject the U-turn to Internet regulation via net neutrality."