Broadband Regulation Debated

Would breaking up local telcos lower prices and boost service availability? Some think so.



U.S. senators are probing what, if anything, can be done to increase the availability and cut the price of broadband service. At the heart of the matter is the question of whether to break up local phone companies in order to promote competition. One bill, proposed by Senate Commerce Committee chairman Ernest Hollings, D-S.C., would do just that, splitting each telco into retail and wholesale arms. Wholesale units would lease high-speed lines to competing Internet service providers.

Pennsylvania state Sen. Mary Jo White complained to the commerce committee that a lack of competition has dissuaded Verizon Communications from selling fast, affordable Internet access to her constituents in rural western Pennsylvania. "I remain convinced that structural separation makes sense and is the only way to assure competitors nondiscriminatory access to customer's homes and businesses," she said.

But critics of regulation say customers would be left with more confusing and less reliable service if a breakup occurred. "It would wreak an absolutely massive amount of destruction on the telecommunications sector and the national economy," says Adam Thierer, director of telecom studies for the libertarian think tank the Cato Institute. "It would be gut-wrenching for consumers."

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