March 31, 2006

Written Testimony on 'Competition and Convergence' in Communications Submitted to the Senate Committee on Commerce, Science and Transportation

Key materials
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The Hearing

On March 30, 2006, the Senate Committee on Commerce, Science, and Transportation held a hearing on "Competition and Convergence" in communications. Mercatus Senior Research Fellow Jerry Ellig testified, along with representatives of various segments of the communications industry and the Consumer Federation of America.

Our Findings

  • "Convergence" means that competing owners of infrastructure can offer consumers multiple services, such as voice, data, and video.
  • For consumers, convergence could mean lower prices, better quality, and new services.

By the Numbers

  • Federal spectrum policy imposes far more costs on consumers than any other telecommunications regulation - at least $77 billion annually.
  • Cable franchising costs consumers about $10 billion annually in higher prices and value of forgone services.

Our Recommendations

  • Allow markets to allocate much larger swaths of spectrum, so that multiple wireless conduits have the bandwidth to offer consumers a full range of services.
  • Remove local cable franchising as a barrier to entry.
  • Ensure that competition policy decisions, such as merger review and net neutrality, employ consumer welfare as the sole standard, are consistent with antitrust precedent, and follow the same deadlines that antitrust agencies must follow.