Welcome to The Heartland Institute’s Telecom Policy Issue Suite, a comprehensive resource for people who support a free-market approach to improving the regulation of information technology and telecommunications in the U.S.

To the left of this essay are links to Info Tech and Telecom News, our national outreach publication on free-market approaches to info tech and telecom issues; Heartland Policy Studies, peer-reviewed original research on telecom topics; Research & Commentaries, collections of the best available research on hot topics in the telecom debate; Heartland books and booklets on telecom; bios and contact information for experts on telecom who work with The Heartland Institute; and to comprehensive directories of individuals and organizations that support free-market approaches to info tech and telecom regulation.

Below those links is a “What’s New” feature that presents titles, short reviews, and links to research and commentary on telecom issues most recently posted on Heartland’s Web site. This list is continuously updated, so we hope you’ll check it regularly.

Under those links is a list of subtopics that appear under the “Info Tech” and Telecom” topics in PolicyBot, the database and search engine that resides on The Heartland Institute’s Web site. You can click on any one of those subtopics and see the titles, authors, date of publication, and short reviews of credible research and commentary from a wide range of sources. Then just click to open and read the entire article. PolicyBot is free, easy to use, and fast.

The essay below presents an overview of the debate over info tech and telecom regulation taking place today. It contains links to individual articles and subtopics in PolicyBot, so the reader can go into much deeper depth on the issues the authors address.

New Information Services

Information technology (IT) refers to the use of technologies from computing, electronics, and telecommunications to store, process, and distribute information. Rapid changes in these technologies have created new goods and services for consumers, contributed to large productivity gains in industry (especially banking and finance), and falling prices for information services.

The Internet is the most exciting application of this new technology, and the rapid expansion of broadband services is making access to the Internet much faster. Digital television and radio and radio-frequency identification tags (RFID) are also new goods and services made available by advances in information technology.

New technology means a rapid transition from wireline to wireless telephone service is underway. Access to the Internet is also increasingly wireless, using Wi-Fi and Wi-Max. Voice-over-internet-protocol (VOIP) makes it possible to have telephone service over the Internet. And file-sharing software allows us to download music and movies at little or even no cost.

A Free-Market Approach

Rapid technological change has also created some new challenges. Opportunities for governments censorship and invasion of privacy by governments and businesses have increased. The Internet has made the violation of copyright much easier, and has made information about our health, finances, and preferences less secure. We love our email, but unwanted spam raises tough questions about who should control our in-boxes.

The public response to these challenges has led to heavy-handed regulation by both the federal government and state governments. Telecommunications is singled out for especially onerous regulation by states and the federal government. Much of this regulation was put into place before technological changes led to the convergence of the previously distinct businesses of disseminating information in print, telephone, and video forms.

The scholars and policy experts who write for The Heartland Institute believe these challenges are best met by voluntary and contractual agreements among innovators, service providers, and consumers, with as little government interference as possible. We support a 1999 report of the U.S. Department of Commerce, “The Emerging Digital Economy,” which said “electronic commerce should be allowed to grow up in an environment driven by markets, not burdened with extensive regulation, taxation, or censorship. Where possible, rules for the Internet and electronic commerce should result from private collective action, not government regulation.”

We also believe governments do have a role to play in supporting the creation of a predictable legal environment globally for doing business on the Internet, but must exercise this role in a non-bureaucratic fashion. Greater competition in information technology and telecommunications industries should be encouraged so that new services are quickly brought to market and so that the new converged marketplace of broadcast, telephony, and the Internet operate based on laws of competition and consumer choice rather than those of government regulation.

We believe there should be no discriminatory taxation against Internet commerce, and that the Internet should function as a seamless global marketplace with no artificial barriers erected by governments.

Some Public Policy Debates

Free-market thinkers are participating in many of the debates over what public policies ought to be in the areas of information technology and telecommunications. Here are some examples that are well-covered by articles available from PolicyBot:

• Taxes on Telecom Services: Purchases made on the Internet are current exempt from most sales taxes, thanks to a federal law. But telephone service is heavily taxed in many states, and some counties and cities levy their own taxes on phone service. The Internet ought to remain tax-free, and taxes on phone service ought to be reduced.

• Video Franchise Reform: Back in the days when cable companies faced no competition from telephone and satellite companies, local governments could grant them exclusive franchises in return for fees and free services to schools, police departments, etc. Today virtually all cable markets are competitive, and franchise fees are a major obstacle to competition and consumer choices. Local franchises should be replaced by statewide laws that reduce barriers to entry while still providing revenue to local governments.

• Universal Service Fund: Back in the days before cell phones and VOIP, governments subsidized telephone exchanges in rural areas to provide affordable service to people in their territories. This system is now often unnecessary, hugely expensive, and distorts the telecommunications industry. It needs wholesale reform.

• Network Neutrality: Government should not restrict Internet service providers from deciding what services to offer and at what prices. Advocates of network neutrality want government to intervene in this arena to “keep the Internet free,” but this is a naive and unworkable position. Investment and innovation need to be rewarded, and this requires the definition and enforcement of property rights which network neutrality advocates would deny.

• Municipal Broadband: Some cities have attempted to build and operate their own broadband networks, either using cable lines, fiber optic lines, or Wi-Fi or Wi-Max technologies. With few exceptions, these systems have failed either because costs were much higher than promises or utilization was much less. We don’t think governments should be in the business of building, operating, or subsidizing broadband networks.

• Open Source: There is a lively debate between those who support propriety operating systems (such as those marketed by Microsoft and Apple) versus those who support open source systems. Some government officials have tried to favor open source over propriety systems; the free-market view is that they ought to compete on a “level playing field” without governments favoring one or the other.

• Digital Divide: Some say the government should subsidize access to the Internet and digital services to close the so-called “digital divide” between rich and poor or urban and rural dwellers. But this divide is smaller than often asserted or assumed, and free-markets, not government entitlements, are the surest way to close it.

• Encryption: Our desire for privacy had led to a vibrant industry that creates and sells encryption devices and services. Government officials feel threatened by privacy and often demand their own “keys” or try to restrict the sale of encryption devices to consumers in other countries. Once again, the best policy should be to limit government’s influence and role in this area.