Telecommunications

The debate over the future of high-tech communications development in Pennsylvania parallels the debate over statewide economic development policy in general: Should state government raise taxes on families and businesses in order to generate funding for more government-directed “investment”? or Should the private, competitive marketplace determine what types of investments should be made, and where and when?

Government-Driven Problems

• Government-directed “economic development” has failed to rejuvenate Pennsylvania’s economy and will likely fail to stimulate investment, development, and deployment of a broadband network that is accessible to those Pennsylvanians who wish to use it, and economically feasible for Pennsylvania companies to invest in it.
• New regulatory bodies are not needed to oversee telecommunications development in Pennsylvania, given that all affected entities are already under the PUC’s jurisdiction. Reorganizing bureaucracy does not necessarily create efficiency.
• New government programs and taxes are not needed to ensure that all Pennsylvanians have access to broadband, or that they are educated about the availability of broadband. Indeed, ensuring that all citizens have access to broadband is not even a government responsibility in the first place.
• Not every Pennsylvanian wants or needs broadband access. Why should those who do not or will not use it be forced to subsidize those who do? This problem is especially apparent in proposals to provide affordable “universal service” to all areas and all consumers in Pennsylvania.

Market-Driven Benefits

• Technology constantly evolves and changes at a pace far faster than the ability of government regulators to adapt to it. In telecommunications, innovation occurs at such speed that today’s government mandate to produce “tomorrow’s technology” by a certain date carries the risk of becoming “yesterday’s news” before the ink is even dry on the order.
• Pennsylvania’s telecommunications future—like its overall economic future—is best served by loosening the grip of government regulations and taxation, and allowing customers and service providers more freedom to make choices in the marketplace.
• A market-based broadband deployment strategy is much more flexible in allowing for technological advances that may require changes in initial investment and regulatory strategies.
• In order to ensure that the greatest number of Pennsylvanians have the most possible access to broadband at the lowest prices, within existing federal regulations, the market should be further deregulated rather than more intensely regulated.
• Truly deregulated broadband would also allow capital investment to take place in areas where there is enough demand to support that investment, rather than force companies to provide capacity in areas where it is not desired by consumers or is economically unjustifiable to investors.
• This capital investment can best occur when money is allowed to remain in the private sector for companies to invest, rather than taxing those same companies (and consumers) and having the government invest it in facilities that may be unnecessary, uneconomic or obsolete.

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The Commonwealth Foundation is a public policy research and educational institute based in Harrisburg, Pa.