Thursday, February 28, 2002
Allowing local bell phone service providers to provide DSL service without all the silly open access restrictions is a great way to roll out broadband as fast as possible. What the government always forgets in its Quixotic quest to "create" competition is that competitors only enter a market when there are profits involved. Local bells aren't about to go through the trouble of ensuring widespread DSL access if they don't have a guaranteed return on that investment. Forcing them to share access on the lines THEY spent the money upgrading does not guarantee them that return.
What the government is forgetting (and Senate Democrats ignoring as a way to play partisan politics) is that one company is often the dominant provider when they create a new market. Broadband service is a VERY new market. Someone has to create that market before there is enough room for smaller competitors to enter the fray. Unfortunately, the government is convinced they must have a wide variety of competitors RIGHT NOW. If that had always been their approach, US Robotics would have never managed to popularize the Palm. The Palm OS enjoyed over a 90% share of the market for many years. Only after Palm created a demand for handhelds (and make a good profit) did other companies get interested in competing with Palm.
DSL IS NOT the only means by which consumers can get broadband access. This means that if the local bells overcharge for DSL, they provide a market opportunity for cable broadband providers, satellite broadband providers and even wireless options. It's like when OPEC raises the price of oil too high. Suddenly it makes economic sense to hunt for new sources in the North Sea or to pump oil from old Texas oil fields which normally would be too expensive.
Markets respond to profits. Government needs to let companies make them.
What the government is forgetting (and Senate Democrats ignoring as a way to play partisan politics) is that one company is often the dominant provider when they create a new market. Broadband service is a VERY new market. Someone has to create that market before there is enough room for smaller competitors to enter the fray. Unfortunately, the government is convinced they must have a wide variety of competitors RIGHT NOW. If that had always been their approach, US Robotics would have never managed to popularize the Palm. The Palm OS enjoyed over a 90% share of the market for many years. Only after Palm created a demand for handhelds (and make a good profit) did other companies get interested in competing with Palm.
DSL IS NOT the only means by which consumers can get broadband access. This means that if the local bells overcharge for DSL, they provide a market opportunity for cable broadband providers, satellite broadband providers and even wireless options. It's like when OPEC raises the price of oil too high. Suddenly it makes economic sense to hunt for new sources in the North Sea or to pump oil from old Texas oil fields which normally would be too expensive.
Markets respond to profits. Government needs to let companies make them.
