Cable and Telecom Freedom
The least important category in the regulatory policy dimension is cable and telecommunications market freedom. It is important to note that these are the only public utility regulation areas included in the freedom index, because some utility “deregulation” has not been truly deregulatory, as in the case of pro-competitive “reregulation” that has restructured electricity and natural gas markets in certain states. Although these services are important for household budgets, it is not at all clear that “deregulation” results in a net increase in individual freedom. The utilities are all characterized by physical connections to the consumer.
Because of the monopoly element in transmission (parallel connections are judged infeasible), even under deregulation governments maintain “common carrier” regulations that require the regulated owner of the transmission grid to allow open access to competing providers at a regulated price. The transmission grid then becomes an open-access resource with no profit incentive for its owner to expand, upgrade, or maintain the network. In many cases, retail competition is tightly managed by state governments to prevent anti-competitive market manipulation. For these reasons, many analysts insist on the term “restructuring” as opposed to “deregulation” for these industries.1
Telecommunications deregulation accounts for roughly two-thirds of the weight for this category, and the remainder is accounted for by statewide cable franchising, which eases the entry of telecom firms into the video cable market.2
Footnotes
1. Peter Van Doren and Jerry Taylor, “Rethinking Electricity Restructuring,” Cato Institute Policy Analysis no. 530, November 30, 2004.
2. Adam Summers, “Cable Franchise Reform: Deregulation or Just New Regulators?,” The Freeman 57, no. 3 (2007): 31–34; and Cecil Bohanon and Michael Hicks, “Statewide Cable Franchising and Broadband Connections,” Digital Policy Institute, Ball State University, 2010.