Telecom Regulatory Review: Kentucky 2014

Posted: 30 Mar 2014

See all articles by Robert E. Yadon

Robert E. Yadon

Ball State University

Barry Umansky

Ball State University

Paul A. Coomes

University of Louisville - College of Business - Department of Economics

Date Written: March 28, 2014

Abstract

“Telecom Regulatory Review: Kentucky 2014” addresses the careful balance that needs to be struck by regulators who want to both protect consumers and attract the sort of private investment that comes when localities signal they want fast broadband. Using the specific experiences in the states of Kentucky and Indiana, the co-authors find a direct nexus between a state’s regulatory climate and the level of investment that flows into the state to expand digital infrastructure.

The paper observes that advances in technology as well as a competitive revolution in the market for communications and information services have erased the rationale for POLR obligations, imposed decades ago to ensure voice phone service to all households and businesses in the state. While appropriate at a time when telephone service was considered a natural monopoly and consumers had little, if any, choice in providers, such obligations do not make sense in today’s vastly different competitive environment.

The paper observes that today’s market is characterized by robust competition among firms offering a range of services based on Internet protocol and wireless technologies. Indeed, consumers in Kentucky and across the United States have been replacing traditional wire line service with more powerful and versatile Internet-based services at an increasingly rapid pace. Simple wireline telephony is no longer the dominant technology for voice communications in Kentucky or elsewhere in the United States.

The paper finds that archaic POLR regulations and related rules add needless expense and limit the ability of traditional telephone providers to invest in the expansion of broadband services that would enhance economic growth in Kentucky. It cites to an earlier DPI study, which found that a 2006 deregulation initiative in Indiana, accelerated the deployment of DSL service in rural communities, boosted infrastructure investment and video competition, and also created new jobs. By eliminating outdated regulation that constrains investment, the paper argues that enactment of Senate Bill 99 would attract additional venture capital to Kentucky and create a climate of entrepreneurship.

Residents of rural Kentucky who purchase Internet-based services would be able to enjoy voice service via the Internet, but would allow others to retain traditional wireline voice service. Finally, the paper notes that, as a rule, the dire impacts on pricing and service availability predicted by opponents of deregulation in other states have simply not appeared.

The paper recommends that Kentucky eliminate unnecessary duplication with federal law, eliminate regulations that unfairly benefit some providers at the expense of others by imposing different regulatory obligations, and retain POLR requirements only in less-populated areas where robust voice competition likely does not exist or is still developing.

Keywords: Telecommunications, Policy, Deregulation

Suggested Citation

Yadon, Robert E. and Umansky, Barry and Coomes, Paul A., Telecom Regulatory Review: Kentucky 2014 (March 28, 2014). Available at SSRN: https://ssrn.com/abstract=2417413

Robert E. Yadon (Contact Author)

Ball State University ( email )

Muncie, IN 47306-0340
United States

Barry Umansky

Ball State University ( email )

Muncie, IN 47306-0340
United States

Paul A. Coomes

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

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