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Texans get railroaded at the Capitol
by Chad Kissinger
Friday, May 23, 2003, Austin, Texas
published in the Austin American Statesman
It seems the Texas Legislature has forgotten the wisdom that says, "Those who forget the past are condemned to repeat it."
Unfortunately, we're
allowing one company
to control telecommunications.
During the late 19th century, Texans suffered the abuses of monopoly control of our railroads. A few had gained monopoly control of the railroad, and used that control, and their ability to unfairly influence elected officials, to charge exorbitant rates, squeeze out competition and to gain a stranglehold on unrelated markets, such as farm goods. Communities that didn't cooperate with the railroad on its terms were bypassed and subsequently became ghost towns as businesses moved away along with the townspeople who followed. Investment capital shifted to states that didn't suffer the tax of an unbridled monopoly.
The "railroad" of the 21st century is, of course, the Internet and telecommunications in general. Just like railroads in the 19th century, telecommunications will shape the future of Texas.
Unfortunately, we're allowing one company to control telecommunications. Just like robber barons in the 1880s, SBC is using its monopoly control and unfairly influencing elected officials so that it can continue to raise rates to exorbitant levels, squeeze out competition and gain a stranglehold on unrelated markets.
In the past, SBC enjoyed a guaranteed profit through well-regulated rates and government subsidies. But in 1996, with their encouragement, the government changed the deal. It gave SBC exclusive ownership of the telephone infrastructure we had paid for over the past 125 years and agreed to allow it to sell other services, including long distance. In return, SBC agreed to allow competitors fair access to the portions of the enormous network we built that were critical to the competitors' growth and survival in the local telephone service market. Once sustainable competition had been created, we would release SBC from pricing and other regulation.
SBC charged Texans
$1.25 billion more
than it would have
had this deregulation
not occurred. What happened was quite different. SBC immediately
began filing lawsuits fighting the same legislation it helped write.
Additionally, it has sent more than 100 lobbyists armed with huge
campaign donations to the Texas Legislature over the past few sessions.
In return, the Legislature completely deregulated SBC's pricing
in 1999, even though the Public Utility Commission says that sustainable
competition still doesn't exist in Texas. According to the PUC,
in 2000 and 2001 alone, SBC charged Texans $1.25 billion more than
it would have had this deregulation not occurred. Most services
have seen price increases of more than 100 percent since then. Where
competition doesn't exist, Texans pay up to 500 percent more for
critical business telephone lines than their competitors pay SBC
in well-regulated California. Sustainable competition was supposed
to hold down prices, but it doesn't exist. So, once price regulation
was removed, prices went through the roof.
This year, the Legislature had a chance to correct this disaster by re-regulating rates and increasing enforcement of rules meant to protect sustainable competition. Instead, the Legislature passed even more price deregulation. Now SBC can "reasonably" discriminate in its pricing. While it used to have to offer its services for the same price to everyone, it now can raise rates to any level for customers who can't use the competition while retaining the ability to lower rates for customers who are also served by competitors.
In the election of 1890, one of our greatest Texans, Gov. James Hogg, was elected to office by advocating the formation of the Railroad Commission. By moving the specifics of regulation from the Legislature, where money reigns supreme over constituent's interests, to the relatively impartial Railroad Commission, Texans regained control of our economic destiny.
Over the next two years, our Legislature will decide whether the Public Utility Commission will continue to be a viable regulatory force during the agency's Sunset review. Texans concerned with our state's economic future should encourage their legislator to empower the PUC to enforce common-sense regulation for the benefit of all Texans.
Kissinger owns Onramp Access Inc., an Austin-based Internet service provider.
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