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| Competition and Chaos: U.S. Telecommunications Since the 1996 Telecom Act | 
| Author: Robert W. Crandall
Publisher: Brookings Institution Press
Category: Book
List Price: $32.95
Buy New: $27.01
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Avg. Customer Rating:  (2 reviews)
Sales Rank: 884761
Languages: English (Original Language), English (Unknown), English (Published)
Media: Paperback
Number Of Items: 1
Pages: 212
Shipping Weight (lbs): 0.7
Dimensions (in): 8.9 x 6 x 0.8
ISBN: 0815716176
Dewey Decimal Number: 384.0973
EAN: 9780815716174
ASIN: 0815716176
Publication Date: April 2005
Availability: Usually ships in 1-2 business days
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Product Description
When Congress passed the 1996 Telecommunications Act, legislators anticipated that the reduced regulatory barriers would lead to increased competition among U.S. telecommunications providers, and, in turn, the new competition would drive innovation and reap economic benefits for both American consumers and telecommunications providers. But the legislation had a markedly different impact. While many of the more aggressive providers enjoyed sharp short-term rises in stock market values, they soon faced sudden collapse, leaving consumers with little or no long-term benefit. In Competition and Chaos, Robert W. Crandall analyzes the impact of the 1996 act on economic welfare in the United States. He also examines how the act and its antecedents have affected the major telecommunications providers, some of whom are now a threatened species, caught in a downward spiral of declining prices and substantial losses. In the wake of the 2001-02 telecom stock market collapse, the industry is preparing for an intense battle for market share among three sets of surviving carriers: the wireless companies, the local (largely Bell) telephone companies, and the major cable television operators. None is assured a clear path to dominance in the drive to attract customers to an expanding array of voice, data and audio services. Although the telecom stock market collapse is now history and the survivors are investing once again, Crandall concludes that regulators failed to adapt to the chaos to which they contributed until the courts forced them to do so.
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| Customer Reviews:
 Not Telecom For Dummies, That's For Sure September 20, 2006
3 out of 3 found this review helpful
While there can be little doubt the book Competition and Chaos is a pro-telecom white paper, albeit an unusually technical one, it makes a worthy case for telecom deregulation in general by pointing out the flaws in our current approach. My only problems with the book are a discussion of wireline shrinkage that seems incomplete, and the author's problematic critique of net neutrality.
In the interest of full disclosure, I admit to working for a telco, one named frequently in the book. So at least to some degree I should be considered a friendly reviewer, in that I agree with his thesis and hope the regulatory environment can sort itself out sometime before I retire. On the other hand, I'm not in a position to reap a huge windfall if such a change were to come to pass, which is another way of saying I'm firmly (or not) embedded in the bowels of lower management. One might say I want to develop a stronger argument, which I believe is necessary to the eventual success of telecom reform.
The prospective reader should be reminded that the book is a economic analysis of recent political policy, written by an economist, so it has a good measure of economic jargon (such as price elasticity) and some telecom jargon (such as UNE-P). Some of the jargon is explained, others not so much. Having read a few white papers in the past few years, it was refreshing to see one with actual equations instead of opinion polls. And of course, it has a plethora of citations, as would be expected of a scholar. I had fun researching the meaning of the Herfindahl-Hirschman index of concentration - rather like hunting for Easter eggs.
Now on to the areas suitable for improvement.
One analysis that could have stood an opinion poll or two is the author's treatment of the overall decline in wireline voice where the author guesses the reason is because of broadband and/or wireless cannibalization (the term is appropriate, if a bit loose, for wireless as most of them are affiliated with the telcos). That is probably true, but why? Though the book is an economic treatment, not a marketing study, economics is the study of incentives, and the motives behind the migration may be less obvious than the author believes.
But my quibble with information gaps in the wireline voice problem doesn't compare with the issues I have with the author's treatment of network ownership / network neutrality. His strident property-rights argument and curious analogy to automobiles are far from convincing; on the contrary, they may provide net neutrality partisans with more mojo in their quest to raise the specter of evil telcos murdering the "free" Internet such as many have accused Microsoft of doing to the PC. I refer the reader to the last paragraph on p. 125, which reads in part, "[Nondiscriminatory access] would prevent network operators from developing their own content and denying access to competitive applications and content [emphasis added]." So in effect, the author argues for the transformation of netops from utilities to broadcasters.
Rhetorical question -- can anyone tell me why the Internet became so popular? Was it so the cheapskates of the world could save money on stamps? Was it so people unlucky enough to live in sexually inhibited areas could have access to porn? Maybe. But a broader way of describing the motivator is the word choice, i.e. less at the mercy of broadcasters' needs. And an Internet where only netop-developed or approved content can roam will be a world of fewer, not more, choices.
What's funny is that I support property rights, and furthermore, I've yet to hear of any plans to replace eBay with "BellBay". But one cannot help but suspect the worst, especially in light of recent revelations by some telcos to "reclaim" the DSL Universal Service Fee, which are supposed to be regulatory "pass-throughs".
I find more troublesome the author's car analogy in the same paragraph. It reads, "In an earlier era, this would have been similar to requiring Henry Ford, who had more than 60 percent of the U.S. automobile market in the early 1920s, from changing the design of his Ford platforms to adopt new technologies and deny his competitors the ability to install their components on his cars..."
While it is easy to imagine the phone network -- or any network -- as a platform, a more accurate analogy would have been to say, "If Ford owned 60 percent of the road miles, `road neutrality' legislation would have required him to allow non-Ford automobiles to drive on his roads, without either an intentional performance or financial penalty." The problem with such an analogy is obvious - it would not have merely undermined the network ownership argument, but obliterated it completely.
What is certain that if a person generally supportive of telecom reform and of modest skill in rhetoric can spot weaknesses such as described, no doubt the conspiracy theorists and populists can as well.
Going back to the utility-broadcaster comparison for a moment, in the final chapter, the author argues a case for vertical integration as a means to ensure the financial returns sufficient to justify new investment. Merely pushing more bits faster will no longer appease the financial markets. But one must wonder, how much content a local TV station, a major network, or a cable company develops in-house? Most content is developed by production companies and sold to the highest bidder. And while the "free" Internet has allowed a lot of content to blossom without additional benefit to the netops, it has also seen a lot more failures that haven't cost the netops a penny -- other than maybe uncollected service charges. Content development is at least as risky as network development, especially, as the author claims, if providers have limited market power; how many new TV shows last beyond the first season or two?
The author has presented a sober study of the trends developing in telecom since the passage of Telecom '96. His thesis that political meddling in the telecom marketplace has done more harm than good I find laudable, and most of the chapters present conclusions which are at least plausible. His training as an economist, and the worldview inherent in such training, lends weight to his analysis but limits the scope of discussion and therefore its' usefulness to the ongoing political debate. After all, if macroeconomics were everything, would we have a minimum wage? Finally, his argument for network ownership and supporting analogy could use refinement. He may have another crack at it if Congress passes COPE '06 or some variant thereof.
 I wish I'd written this August 2, 2005
4 out of 4 found this review helpful
This book on U.S. telecommunications policy over the last ten years is a jewel of clarity. It cuts through the endless debates and draws sharp, clear, and actionable conclusions. Unfortunately, because telecommunications policy is pretty abstruse stuff, not many readers will be all that interested, or stick with the book. For those that do, they will be well rewarded. One word of warning: Robert Crandall does a lot of consulting for the RBOCs, and as a result he is occasionally biased. But over all he manages to put his biases aside, and produce a fair assessment.
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