Markets Have Changed; Regulatory Tasks Must Follow, FCC Says

Predictably, the Federal Communications Commission's decision to remove some mandatory reporting by some leading telcos (AT&T, Verizon, Qwest, Frontier and Embarq) is seen by some public policy advocates as a blow to consumer welfare. Under new rules, and after a two-year phase-in, those carriers can stop reporting network reliability, customer satisfaction and infrastructure investment data. 

AT&T, Verizon and Qwest will continue to file price, revenue, and total cost information necessary to achieve the goals of price cap regulation, though. But the FCC argues that some data, used in a monopoly environment to monitor customer welfare, are not needed in competitive markets, especially when the rules are not applied universally, on cable operators, for example. 

Though one can disagree about the thesis that competition itself forces contestants to maintain and improve the quality of their offerings and the quality of their customer service, market forces arguably already have forced all contestants to ramp up the quality of their service. Consumers have choice, and are exercising their freedom to abandon providers and choose others. 

That is not to say markets now are perfectly competitive. Nor can one argue that markets always will remain robustly competitive. The outcome of competitive markets is that winners get stronger and losers go out of business. Over time, the inevitable logic of competition is therefore less competition. So the need for oversight does not disappear. 

But it does not make sense to burden competitors with reporting requirements that have real costs, when monopoly markets no longer exist, and the abuses that the rules originally were intended to prevent, are prevented by consumers with choice.

Reporting imposes real costs on businesses. Many smaller firms, with no market power, report that their annual reporting costs for Sarbanes-Oxley compliance alone cost between three quarters of a million and a million dollars a year. That isn't to say Sarbanes-Oxely was anything but a well-intentioned attempt to prevent abuses. Still, burdening companies with compliance costs is not an unalloyed good thing. It raises costs of doing business at a time when costs are a major concern in the communications business, precisely because of intense competition.