National Video Franchises Are Going to Happen
In the last year, people all across America have figured out that we need world class high-speed communications networks to compete with companies and workers in Asia. The resulting pressure on politicians to do whatever is necessary to trigger the investments to build those networks is starting to produce results.
A week ago Senator Ensign, of Nevada, introduced a new telecom bill that would largely return telecom to market forces. The market value of US telecom equipment makers, who make the boxes, switches, and fiber that would build new networks, increased by $12 billion in two days, and telecom company shares increased by another $10 billion, for a total of $22 billion. That’s 10% more than the market capitalization of GM or ford, and 25% more than the market cap of AT&T. In 2 days.
Last Friday the FCC put their oar in the deregulatory water by removing regs from DSL services. That’s good too.
One of the hot issues is video. In order to earn a return on the $1500 or so it will cost to run fiber to a home the telecom companies plan to offer consumers video services that will compete with current cable services. In the end customers will be able to buy every communications service–home phone, cell phone, internet, movies, TV, vopice mail, and whatever else they dream up–from several competing sellers. Great for consumers–more choices and certainly lower prices.
But current regulations would require the companies cut separate deals with thousands of local governments, each of which has the incentive to hold up the train. That would slow down fiber investments by years. Not good.
Today the Texas legislature took the matter into its own hands by passing a law that would remove that power from local governments. Now a company will be able to apply for one statewide franchise. I am not surprised by this, having testified there on the subject 2 weeks ago. But I am surprised by their speed and resolve, which indicate this is a front-burner issue with voters.
In a talk to the National Governors Association in Des Moines 2 weeks ago I recommended they all do the same before Congress gets tired of waiting and settles the issue for them.
You can read more about the video franchise issue in my good friend Randy May’s blog on the subject today, as well as in an op-ed in today’s WSJ.
Senator Ensign’s bill would handle the issue by moving franchising to the national level. The stock market clearly thinks the Ensign bill, or something similar, has a real chance of becoming law later this year.
No one has ever accused the White House of beiong politically naive. They need to get in front of this issue and drive it across the goal line if they want to keep that reputation. Today, the President signed the 1000 page, $286.4 billion transportation bill into law–in a Caterpillar plant in Montgomery, Illinois. I am sure he received a standing ovation. The 6000 projects Congress loaded into the bill will certainly sell a few bulldozers. At the signing, he told the group “If we want people working in America, we’ve got to make sure our highways and roads are modern.”
But it’s information technology, not bulldozers, that can help American companies compete globally. Aggressive leadership fromthe President could dramatically speed the passage of a new telecom law and unleash massive investment in information technology. With or without the White House, however, I think Congress is going to solve this problem this year. I suggest they jump on this issue before the train leaves the station.
JR
