Competition Is Strong in Local Telecom Markets

Published December 1, 2005

The deregulation moves made in Michigan follow the direction taken recently by the Federal Communications Commission (FCC) in recognizing the robust competition in the telecom market nationwide.

For example: In a dramatic policy reversal, the FCC earlier this year largely eliminated the “forced access” requirements that compelled traditional wireline phone companies to share their local calling networks with rivals at below-cost rates. Subsequently, the commission exempted both cable and wireline companies from having to share their broadband networks with Internet service providers who lack lines and other transmission infrastructure of their own.

Congress originally conceived forced access as necessary to jumpstart competition in local calling services. Lawmakers assumed once new entrants gained market share, they would build new facilities to compete against incumbent wireline networks. But as documented in a 2003 study by the Mackinac Center for Public Policy, most competitors in Michigan shunned investment in independent facilities, preferring instead simply to resell the network services they had obtained at a discount, compliments of regulatory fiat.

That outcome is precisely the opposite of what Congress intended. It has been a significant factor impeding telecom investment and economic growth.

— Diane S. Katz

For more information …

The 2003 Mackinac Center for Public Policy study, “Crossed Lines: Regulatory Missteps in Telecom Policy,” is available online at