Years ago it became clear that digital technology was going to gradually eliminate the old analog differentiations between local phone service, long distance service, data service and video services. In a digital world, all this stuff is just data. And if it’s all data, any company that can transmit data ought to be allowed to transmit data without specific regulations that attempt to differentiate between different “kinds” of data.
Accordingly, traditional “phone” companies began offering data (Internet) access, and cable companies began offering voice and data service. That part was easy, and cable got quite a leg up on telecom in the race to offer the consumer a complete package of services from a single vendor.
What was more difficult was for phone companies to begin offering video services. This required the building of expensive new networks with much greater bandwidth and new switching technology.
But an even greater obstacle to video delivery by phone companies was the enormous regulatory burden borne by telecom companies. An additional obstacle is the archaic local franchise system, by which municipalities award video monopolies to cable companies. But now that new competition is coming to video, the old video monopoly era is over, and it’s also time to end the local video franchise system.
The Texas Legislature recently passed video franchise reform legislation, which allows any video provider, not just telecom companies, to obtain a statewide franchise, rather than having to negotiate franchises jurisdiction-by-jurisdiction. The revenue formula remains untouched, so municipalities cannot complain that their revenues are being harmed.
The result was immediate. Telecom companies quickly began rolling out fiber-to-the-home networks. New capital is flowing into Texas, and it is creating jobs. This investment will also result in new tax revenue – the right kind, which is raised through economic growth.
Other states, such as Indiana, have seen what is happening in Texas, and are now considering passing their own telecom reform, including video franchise reform. Such efforts will benefit consumers by helping to eliminate one of the last remaining monopolies in the U.S. economy.