While in Washington ideologues argue over whether there is adequate competition in the communications industry and dream up fanciful schemes to redesign the communications industry and dangerous plans to regulate the Internet, the states are moving ahead with modernizing their communications regulations to reflect the competitive reality that we see around us every day.
This week the story is Georgia, where the legislature is beginning the process of eliminating hidden and distortive subsidies in the rates paid by Peach State consumers.
Wisely, Georgia is planning to "bring access charges to parity," which means to eliminate the subsidies buried in inter-carrier compensation, or fees paid between different carriers to carry local and long-distance traffic. The entire system is outdated and creates competitive distortions between companies.
Georgia is also attempting to make important changes to its Universal Access Fund, a state-based form of universal service subsidies. The problem here is that rural phone providers have become welfare dependents on the Fund, and consumers in urban areas end up paying higher fees to subsidize phone service to rural areas. Not only is this unfair to suburban consumers, but the rural providers have become content to sit back and collect subsidies instead of aggressively modernizing their networks to provide competitive services to their customers.
Ultimately, such funds balloon to enormous size and have inadequate oversight, which invites abuse and corruption. Georgia is wisely trying to eliminate the rural carriers' perpetual dependency on such subsidies and force them to invest and compete.
The details, of course, are subject to the political process. Subsidy mechanisms may be eliminated outright, or may be phased out over a period of years, depending on whatever political compromises are worked out among the legislators.
But the important thing is that Georgia is moving ahead with real, practical reform.
Other states, including Michigan, Wisconsin, Colorado, Kansas, Minnesota, Missouri, New Jersey, New York, North Carolina, Pennsylvania, Tennessee and Washington are all considering legislation during this state legislative session to fix their access charge regimes and to otherwise modernize their communications regulations. They're taking pragmatic action to protect their consumers and to make sure they provide an environment hospitable to competition, investment and economic dynamism.
The action, it seems, is in the states. For Washington DC, this could be--how should we say it?-- a "teachable moment."
Today's TechByte was written by IPI President Tom Giovanetti.