New Study Says Competitive Market Serves Callers Well
WASHINGTON, D.C. - A proposal by the California Public Utilities Commission to impose significant regulations on the state’s highly competitive wireless telephone industry is unnecessary and extreme, and would harm the very consumers it seeks to protect. That is the conclusion of a new study by Emory University Professor of Economics and Law Paul H. Rubin.
“Since the wireless industry in California is competitive, any new regulation will increase prices and reduce the level of services available to consumers,” Rubin writes in his study released today by The Progress & Freedom Foundation, where he is a senior fellow. “Regulation will also have unintended consequences: less, not more, information offered in the marketplace, reduced rates of innovation, less entry and competition, and increased litigation. Although the proposed regulations are labeled a consumers ‘bill of rights,’ they actually will reduce the rights of consumers to contract for plans that they desire.”
Rubin, a former Federal Trade Commission and Consumer Product Safety Commission official, finds “no evidence” the market is “not operating well”. He says the wireless industry is already regulated under state consumer protection and anti-deception laws and other regulations applicable to all industries. Citing recent figures used by advocates, Rubin says only “three to four consumers per million per month found it worth filing a complaint of any sort.
”He says the California market is “highly competitive,” with 158 registered wireless carriers – six to eight in any given market. That tends to put consumers in the driver’s seat and make additional regulation unnecessary. “Carriers compete in this market by offering a large number of plans and options,” Rubin writes. “Carriers could also compete by offering provisions covered by the proposed rules. The fact they do not indicates that consumers do not find these provisions worth the cost.”
The Progress & Freedom Foundation is a market-oriented think tank that studies the impact of the digital revolution and its implications for public policy. The Foundation is a 501(c)(3) nonprofit organization founded in 1993.