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Arnold Kling has a Ph.D. in economics from MIT; founded, one of the very first commercial websites, in 1994; separated from Homefair in January 2000 after it was sold to Homestore; is author of Under the Radar: Starting Your Internet Business without Venture Capital, and is an essayist. Send comments to us at

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February 27, 2004

The Phone Deregulation Argument

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Posted by Arnold

First, James Glassman wrote,

The law says that the Bells have "[t]he duty to provide, to any requesting telecommunications carrier for the provision of a telecommunications service, nondiscriminatory access to network elements on an unbundled basis at any technical feasible point on rates, terms and conditions that are just reasonable and nondiscriminatory" [Sect. 251 (c) (3)].

UNE-P rates, set by state commissions, are certainly just and reasonable.

In response, Adam Thierer wrote,

Glassman, Fein, and Norquist have asked the free-market movement to follow them down a path that essentially rejects free markets and instead embraces big government solutions. In light of the miserable failures of the post-Telecom Act regulatory regime, they need to rethink their support for infrastructure sharing and give free markets and real deregulation a chance.

In rejoinder, former Senator Malcom Wallop writes,

Thanks in large part to AT&T refusing to open its own network to MCI and Sprint in 1984, Ma Bell was broken up by the Reagan Administration (hardly an Administration known for its devotion to government regulation) into AT&T long distance and the regional Bells. AT&T was required to lease its network to competitors, resulting in vigorous facilities-based competition in long distance today. And with that competition comes choices for the Bells.

If the Internet had existed in 1984, then the decision to force AT&T to lease its long-distance lines at regulated rates would have been wrong (Incidentally, I think that Wallop is wrong to imply that this was a Reagan Administration move--see this timeline.) The Internet would have been sufficient to enable competition in long-distance communication.

The idea that we need competition in something called telephone service is anachronistic. We need competition in what Bob Frankston calls connectivity. With connectivity, we do not need special regulatory regimes for voice bits as opposed to other bits.

Comments (1) + TrackBacks (0) | Category: telecom, FCC


1. John on June 30, 2004 01:35 PM writes...


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