Tech (Telecom & Info)

Overview: Federal, state and local governments have granted franchise monopolies to local and long-distance telephone, cable and internet; Telecommunications Act of 1996 allowed monopolies to continue if they wanted; and the federal government has overly-generous intellectual property laws for information technology monopolies.


(1) Tech Sector Industries

(a) Telecommunications = telephone, cable, internet
(b) Computer Design = design of computers, engineering
(c) Manufacturing = equipment, computer, electronic, electrical
(d) Publishing = software
(e) Trade = sell electronics at wholesale and retail stores
(f) Info Services = support management, operations

(2) Regulations favoring monopolies 

In 1913, the Federal government used regulation to create the AT&T telephone monopoly 

Today, Federal, state and local governments regulate telecommunication monopolies:

> Federal Communications Commission (FCC) regulates interstate communications by wires (including telephone), cable, satellite, television and radio
> Each US state has a public utilities commission, which regulates privately owned telecommunications
> Most states regulate the cable industry and their rates at the local level (to the extent permitted by federal law)

Federal, state and local governments grant franchise monopolies to local phone service companies (i.e., local exchange carriers or LECs)

> dominated by Regional Bell Operating Companies (RBOCs) and their affiliate BOCs (AT&T and Verizon duopoly, CenturyLink and also Fairpoint and Frontier, both purchased from Verizon)
> Competitive local exchange carriers (CLECs) are additional companies allowed to compete with the LECs, including AT&T in some localities and power companies (about 100 other franchised local telephone companies)
> an interexchange carrier (IXC) is a long-distance carrier that carries traffic between LECs

Federal, state and local regulations have also monopolized long-distance telephone service (both fixed line and Mobile Broadband Wireless):

> dominated by RBOCs (AT&T, Verizon)
> RBOCs and LECs are allowed to compete under Telecommunications Act of 1996

Most states create monopolies by requiring cable companies to be franchised

> Cable TV, internet and digital data services are dominated by cable companies (Comcast, Time Warner, RBOCs)
> regulations favor exclusive ownership of cable television operating systems, internet, and radio and TV channels in most markets

The Telecommunications Act of 1996 was a joke that said the monopolies could compete if they wanted to. The Federal government failed to eliminate government-protected monopoly franchises for local phone, cable and internet services:

> LECs not required to provide access to their facilities for CLECs (in countries like the U.K., incumbent telephone and cable operators are required to lease their networks to competitors at cost.)
> local governments and public utilities block potential competitors by making it unnecessarily difficult and expensive to build new networks for:
(i) placing wires above and below public and private property (rights of way)
(ii) renting space for wires on utility poles or ducts (pole attachment contracts with public utilities) 

The government has been trying to regulate broadband services (i.e., high-speed internet access through coaxial cable, optical fiber, radio or twisted pair) since the recent development of internet, cable and wireless services

> laws prevent localities and citizens from building their own broadband networks
> “net neutrality plan” seeks to regulate the internet monopolies as public utilities (like the phone industry)
> government spectrum auctions that sell rights (licenses) to transmit over specific bands (e.g. mobile phones) have resulted in corruption by collusion 


Federal government grants excessive copyright protection for information technology

> Microsoft software monopoly
> Google, Facebook 


> other countries advantaged by stronger U.S. environmental laws (e.g., rare earth elements)
> advanced manufacturing, electronics, computers depend on increased electricity usage


(3) Monopolies are leading to economic problems 

Monopolies restrict growth, bring poorer service and higher costs (three times the rate of inflation), and suppress innovation 

Monopolies create paid "fast lanes" on the internet to edge out cash-strapped startups and smaller internet-based businesses 

Industry monopolization (revealed from preferential telecommunications re-regulation and testimony of monopolistic abuses practiced by the Microsoft software monopoly against smaller businesses and entrepreneurs during their antitrust lawsuit) led to a slowing of business activity, bursting of the tech bubble, the 2000 economic crisis and further consolidation 

(4) Economic problems can be solved by deregulation reform

> abolish regulations favoring exclusive ownership of phone, cable television and internet operating systems, and radio and TV channels
> require incumbent telephone, cable and internet operators to provide access to their networks to competitors at cost
> stop “net neutrality plan”
> reform government spectrum auctions
> abolish laws preventing localities and citizens from building their own broadband networks
> abolish excessive copyright protection for information technology

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