Deregulating Florida, USA's phones

Floridians can expect to start saving money as competition for basic residential telephone service increases. Almost unanimously, the Florida Legislature approved a measure that lowers the fees local phone companies charge long-distance companies for access to their phone lines. The legislation also requires long-distance companies to cut rates for long-distance calls within Florida (already among the highest in the country.)

Researchers examining the effects of deregulation conclude that correcting unfair practices and removing any unnecessary subsidies were reason enough for the Florida legislature to act.

Other benefits include:

Lower in-state long-distance rates will save as much as $400 million.

Competition has already caused AT&T to cut rates by 30 percent.

The measure mandates that phone companies increase public awareness of lifeline services for poorer consumers to 125 percent of the poverty line.

While subsidised local phone service may be good for the few people in this world of infinite area codes who rarely call anyone outside their neighbourhood, these barriers stifle the kind of competition that would stimulate lower costs or service enhancements. It's far better to allow the invisible hand of the market to play its role in the industry that "lets your finger do the walking," observers say.

Source: Peter Schorsch, Can You Hear the Savings Now? Good! Point of View, The James Madison Institute, April 4, 2002.

For more on Regulation http://www.ncpa.org/iss/reg/

FMF Policy Bulletin\25 September 2002