In a 45-page analysis titled, “Telecommunications Competition: The Infrastructure-Investment Race,” Dr. Anna-Maria Kovacs examines the United States’ regulations that are forcing companies to build and maintain copper-based legacy telephone networks and the impact these have on the communications industry.
According to Kovacs, these regulations are unnecessarily diverting investment away from modern broadband networks and services. The research showed that only 5 percent of U.S. households rely solely upon traditional copper networks for connectivity, yet the regulatory framework forces companies to keep investing in these outdated systems.
The study, which was published by the broad-based coalition Internet Innovation Alliance, showed that 99 percent of all U.S. communications are transmitted over cable, wireline, wireless, or satellite platforms. Legacy circuit-switched traffic accounts for less than 1 percent of traffic. The study showed that is likely to decrease to only a small fraction by 2017.
Despite how little traffic is circuit-switched-based, U.S. regulators require incumbent phone companies to maintain legacy networks even after they have upgraded to more modern infrastructure. According to the study, incumbents spent $154 billion on their communications networks from 2006 to 2011, but more than half of that went to maintaining outdated legacy networks. This limited funds available for upgrades and expanding high-speed broadband networks. Cable providers, who are not bound by the legacy rules, spent $81 billion during the same period and were able to dedicate all those funds to broadband infrastructure.
“Regulation, however well intended, changes too slowly for the fast-moving digital world,” Kovacs said in a press release. “It distorts the market and hinders innovation.”
To allow cable companies and phone companies to compete effectively with one another, the Internet Innovation Alliance recommends that these regulations are updated.
“If federal and state policymakers want to continue to foster a world-leading, highly competitive communications market in America that is responsive to consumers’ needs and preferences, they must modernize policies and create a level playing field for all competitors to invest and innovate,” IIA Honorary Chairman Rick Boucher said.
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