|
|
|
|
|
|
|
|
|
Posted Wednesday, February 27, 2002 Tauzin-DingellThe only support for Tauzin-Dingell that I have seen (outside of Congress) is this lukewarm endorsement by Stephen Moore on the conservative web site National Review Online.
Moore says that the Baby Bells lack the incentive to provide broadband, because under current regulation they must open up any broadband networks to competitive providers. Most Net-heads disagree. On the left, you have Bob Frankston, David Reed, and friends. And on the libertarian right, the folks at TechCentralStation are outraged that Tauzin-Dingell is aimed at enhancing the power of monopoly phone companies. The Net-heads want to see the local Bells broken up vertically--with one part doing wholesale connectivity and the other part doing retail phone service (or whatever it wants to do). Here is where I stand:
. . . . . .
The Economics of TelephonyAndrew ("Content is Not King") Odlyzko writes infrequently but insightfully about the economics of telecommunications. In this piece, he has many interesting things to say about the business outlook for various telecommunications services. In particular, he says, for several years now wholesale prices for long distance voice calls in the US have been under a penny a minute (reflecting lower costs). Those costs and a competitive marketplace are not compatible in the long run with consumer prices that are 10 times as high. It was inevitable that for ordinary customers, long distance was eventually going to be provided by their local carriers on a flat rate basis. The way I would put this is that long distance service is asymptotically free. Are the stocks of local telecom providers overvalued? Odlyzko writes, wireless carriers are valued at about $2,000 per subscriber (adding up stock valuations to debt). ILECs are valued at $2,000 to $3,000 per line, while cable TV networks are valued at $4,000 to $5,000 per subscriber. These valuations, much higher than the cost of replacing the assets of these businesses, all may very well be too high...What these valuations do is reflect the inertia in the system...Investors may be overestimating this inertia, and the ability of managers to exploit it profitably, but so far their faith has been justified. Odlyzko offers the intriguing and optimistic hypothesis that as voice telephone traffic migrates to cell phones, the local phone companies (ILECs) will need to push broadband services in order to maintain revenues. . . . . . .
Copyright 2002-2003 Arnold Kling. All rights reserved. Terms of use |
|
|
