> I really love T-Mobile, but its also a validation of all the ideas that traditional telecom regulation rejects.
It's quite possible that traditional telecom regulation is ill conceived. Rural build out requirements are effectively a tax on providing service in urban areas used to subsidize providing service in rural areas. It's government interference in the market -- and maybe that's necessary to get what we want, but we should at least admit what we're doing so we can properly evaluate it.
In particular, if we want to have a subsidy for rural build outs, that doesn't automatically mean the money should come from telecommunication customers in urban areas. The premise itself is that telecommunications service is something good that we want to promote and make more affordable, so making it less affordable for urban customers in order to subsidize rural customers is robbing Peter to pay Paul. If we have to rob somebody then we should either rob somebody we don't like (e.g. tax cigarettes or gas guzzlers) or the money should come from everyone equitably via a tax on general sales/income/etc.
"Traditional telecom regulation" implies that we can't have gigabit fiber in New York City (population density ~27,500/sq mi) until it is cost effective to also install it in Loving County, Texas (population density ~0.1/sq mi). That seems significantly less desirable than, for example, setting aside a fixed amount of subsidy each year and dividing it between each carrier based on the number of citizens newly served who were not previously served at a given class of service. That way the market works and the most efficient markets are not delayed (i.e. NYC gets gigabit fiber right away) but as the low hanging fruit is picked and the number of new residents offered service per year decreases, the subsidy per each newly served resident increases until the subsidy for installing service to the last unserved resident finally exceeds the cost of installing the service.
I was thinking about this just the other day. Fixed subsidy per resident, and we see how far that gets you. The subsidy we have now is not a small thing. Even ignoring the cross subsidies intrinsic in build out requirements, we directly subsidize rural wired service to the tune of $4.5 billion per year via taxing long distance voice service. That's as much as TMobile spends on CapEx every year to build out an LTE network avaible to 200 million mostly urban customers.
What I'm suggesting is a fixed subsidy amount ($X billion each year) which is split between all the carriers based on how many new customers that carrier serves who weren't served by anyone in any previous year. So on the one hand you have the carriers competing to increase their share of the subsidy pool every year by adding service for more new customers than their competitors, and on the other hand as the remaining unserved residents become those in ever more poor and rural areas and the rate of expansion slows overall, that causes the subsidy per new resident to increase and keep continued expansion attractive until the last unserved resident is served.
It's quite possible that traditional telecom regulation is ill conceived. Rural build out requirements are effectively a tax on providing service in urban areas used to subsidize providing service in rural areas. It's government interference in the market -- and maybe that's necessary to get what we want, but we should at least admit what we're doing so we can properly evaluate it.
In particular, if we want to have a subsidy for rural build outs, that doesn't automatically mean the money should come from telecommunication customers in urban areas. The premise itself is that telecommunications service is something good that we want to promote and make more affordable, so making it less affordable for urban customers in order to subsidize rural customers is robbing Peter to pay Paul. If we have to rob somebody then we should either rob somebody we don't like (e.g. tax cigarettes or gas guzzlers) or the money should come from everyone equitably via a tax on general sales/income/etc.
"Traditional telecom regulation" implies that we can't have gigabit fiber in New York City (population density ~27,500/sq mi) until it is cost effective to also install it in Loving County, Texas (population density ~0.1/sq mi). That seems significantly less desirable than, for example, setting aside a fixed amount of subsidy each year and dividing it between each carrier based on the number of citizens newly served who were not previously served at a given class of service. That way the market works and the most efficient markets are not delayed (i.e. NYC gets gigabit fiber right away) but as the low hanging fruit is picked and the number of new residents offered service per year decreases, the subsidy per each newly served resident increases until the subsidy for installing service to the last unserved resident finally exceeds the cost of installing the service.