Proposed Telecom Rules Threaten Competition

Washington, D.C., March 11, 2003—The Competitive Enterprise Institute and several other free market groups are petitioning the White House to support the federal approach to drafting rules for the telecommunications industry taken by FCC Chairman Michael Powell over a “states rights” approach.  The Federal Communications Commission has tentatively adopted a proposal that would turn over regulation of many aspects of the industry to the 50 states and the District of Columbia, a decision that would slow innovation, investment, and recovery by creating greater uncertainty over future rules.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />


“Capital markets are clearly worried about the new rules the FCC has proposed,” said CEI Senior Policy Analyst Solveig Singleton.  “In the two days after their plans were announced, the top four regional operators lost over $12 billion, while their closest competitors posted little or no gains.  The markets are alarmed for good reasons – state commissions have rarely taken the lead in deregulating any aspect of the telecommunications industry. Again and again, federal legislators and regulators have stepped in to protect national markets from state intervention.”


Singleton says the decision to give individual state commissions authority over the “unbundling” of local networks will unnecessarily add additional layers of complication to the process of creating competitive local telecom markets.  Unlike other areas of federal control, distributing power to local authorities will actually create a more, not less, onerous burden for industry.  Existing networks are organized regionally around population centers, not in harmony with state and local boundaries.


“Certainty is a basic requirement of fairness and the rule of law. Without certainty, law cannot serve its most basic function of allowing people to avoid and resolve conflict, nor can investors make plans,” continued Singleton.  “The certainty that investors need now will not come from the slow machinations of 51 separate state commissions.”

The Competitive Enterprise Institute is joined in the petition by representatives of The Heartland Institute, The Discovery Institute, the Illinois Policy Institute, the Mackinac Center for Public Policy, the Heritage Foundation, and the Ohio Taxpayers Association.  The letter is available online.

CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government.  For more information about CEI, please visit our website at