Pickering: Move Toward ‘Reagan Doctrine of Telecom’

Posted February 14, 2011 at 5:38pm

Conservatives should be encouraged that many in the newly elected Republican class of 2010 cite President Ronald Reagan as part of their political legacy.

Certainly they embrace the ideology of the Reagan era, and many overcame political incumbency and the Washington establishment to earn their right to lead.

But now they will be tested as they face powerful economic interests, confront deficit spending and promote pro-growth policies in the midst of Washington special interests. For those who would build on Reagan’s legacy, a key opportunity exists to focus on the nation’s telecommunications policy and preserve free-market conditions in broadband services.

It often goes unheralded, but today’s telecommunications industry — from all those smart phones to the efficiencies of cloud computing — owes much to President Reagan’s 1983 decision to break up AT&T’s national monopoly, spurring an explosion of competition and investment.

Republicans led again after voters in 1994 created a new Republican Congress that passed the landmark Telecommunications Act of 1996. That law ended several noncompetitive, Depression-era policies that favored the old monopolies. Predictably, innovation and job creation followed.

Unleashing free-market forces in telecommunications and technology is one of the least emphasized — but perhaps one of the most important — legacies for Republicans over the past generation. It offers a template of how government should interact with business: not by creating taxpayer-funded jobs but by creating policies that lead to thousands of jobs and hundreds of companies and dramatically improve the way America conducts business.

In addition, we should acknowledge it was both political parties that injected free-market capitalism into national wireless policy, resulting in the first competitive spectrum auctions beginning in 1994.

Before that, there were only two cellular licenses in each market, one given to the local wireline incumbent and one given by lottery to a competitor — not exactly the way to create a dynamic market.

Once again, innovation and job creation followed. Even better, the auction policy represents one of the most fiscally responsible budgetary actions Congress has ever taken, creating at least $60 billion in new revenue for the U.S. Treasury.

But now the advances in telecom created by those landmarks are being challenged, and Republicans must learn from our successes but also our failures. Let’s admit that we not only failed to control government growth and spending, but we also failed to preserve functioning free markets in our financial sector.

The latter jeopardized free-market capitalism as we have known it and contributed to the 2008 election of President Barack Obama and Congressional Democratic majorities. “Too big to fail” may be an apt description, but it’s bad policy.

Somehow, we seem to have forgotten a Reagan fundamental — that a market is best served by competitive, small, mid-sized, as well as large, businesses.

Unfortunately, the full, vibrant competition in broadband services to American businesses promoted by Reagan and the 1994 class is at risk. Whereas competition has been maintained in voice, video, data and wireless services to residential markets, this is not the case for these same services provided to businesses.

The Government Accountability Office has reported that up to 80 percent of American businesses have only one dedicated broadband provider. This distinction is critical. Residential competition is working; however, competition to businesses is not.

Therefore, it is essential that we maintain the same type of market-opening rules in the broadband business market that both Reagan and the 1994 class used to create competition in every other telecom market.

To build on our telecom legacy, the 2010 Republican class should reject any policy that reduces competition and further consolidates the market into the hands of two or three telecom companies. We should learn from the mistake of the financial meltdown that monopoly, duopoly and too-big-to-fail policies will not work.

This telecom policy thicket is particularly thorny. It involves highly technical specifics that can challenge a focus on broad policy, and it is among the most partisan of political issues. Part of the challenge is that policies to create and preserve market access and market-opening conditions often take years to manifest themselves: They can mean little to the consumer until they mean everything.

I believe that Reagan-era principles can inspire the 2010 Republican class. In 1983, the president faced a world where there was only one national phone company. Copper networks and rotary dial phones were all that a monopoly would allow. The president took decisive action, and a new age of free-market innovation and job creation followed; we can do the same today.

As with 1994, the 2010 election represents a new wave of political change energized by populist insurgency. The 2010 class has the opportunity to advance the cause of freedom by embracing a “Reagan doctrine of telecom,” encouraging robust free-market competition that builds on what we know works.

Former Rep. Chip Pickering (R-Miss.) served on the House Energy and Commerce Committee. He previously worked for Sen. Trent Lott (R-Miss.) and served as a staff member of the Senate Commerce Committee, where he helped shaped the Telecommunications Act of 1996.