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March 31, 2004
CONTACT: David Fish
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Talkin’ Telecom Truth in Texas
Lassman Testifies Before Committee on Regulated Industries

WASHINGTON, D.C. - In recent testimony before the Texas House Committee on Regulated Industries, Progress & Freedom Foundation Research Fellow Kent Lassman resisted an invitation to describe the future of communications. But he offered a good dose of direct advice: try to worry less about reactions of "industry players" and more about consumer well being. He urged legislators to ask themselves a simple question as they contemplate reforms to communications law: "If adopted, is this policy more or less interventionist in the market than alternative policies?"

Citing successful deregulatory efforts in states as different as Wyoming, Florida and Massachusetts, Lassman told lawmakers "Consumers' welfare is enhanced as the role of administrative law - particularly in rate setting - cedes to established procedures of contract and property law." He urged Texas to adopt similar "new modes of telecommunications regulation."

"Your task is to create the conditions for investment and innovation," Lassman said in written testimony. "The technologies and organization of the industry will take care of themselves. The price system collects more information and processes it with more power than any regulatory proceeding. Unleashed, private firms that operate in a system of contract law instead of administrative rulemaking are powerful agents of change and wealth creation." He said the time has come to "jettison the tremendous drag of regulated prices."

A number of new technologies or industry players, including voice over the Internet (VoIP) and broadband over powerline (BPL), are "ascendant in the market and disruptive to the current regulatory system" and question the need for heavy regulation, Lassman testified. "Centripetal and centrifugal forces are at work on the networks that carry our communications traffic - from the new CLEC switches to BPL," he said. "The networks are in our devices, in the air, on cables, wires and fibers." Meanwhile, "communications services are converging."

"Your challenge is to legislate a set of rules that are easy to understand and adaptive as the technologies they regulate," he concluded. Lassman's comments were based, in part, on a recent study of Texas and other states' telecommunication laws.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation