Why Regulating Broadband Isn’t a Cut-and-Dried Issue

Why Regulating Broadband Isn’t a Cut-and-Dried Issue


Being unhappy with one’s internet service provider (ISP) isn’t uncommon. A lot of us find ourselves at the mercy of a single provider who charges high rates but offers substandard service. It is enough to make you start believing that broadband should be regulated like a utility. But is regulation really wise?

Utilities are considered public entities for all intense and purposes. They are regulated by state commissions in exchange for being given monopoly control over designated areas. Those monopolies exist whether you are dealing with a private utility, a municipal utility, or a co-op.

Why Regulation Exists

Regulating utilities was born from the desire to electrify rural parts of the country still without basic electric service. In order to encourage utility companies to invest in the necessary infrastructure, they were granted service monopolies. Regulations were put in place to prevent them from using their monopolies to abuse customers.

Utilities are still regulated today. One of the more visible examples of that regulation is found in rate increases. Before utilities can raise their rates, they have to get approval from the appropriate state agency. In most cases, they have to submit a rate increase request accompanied by data justifying the need for the increase. Then it is up to the agency to approve or deny the request.

Improving Broadband Access

Some would argue that regulating broadband is necessary for the same reason utilities were first regulated decades ago. They say that introducing a similar regulation and monopoly system would encourage broadband providers to invest in rural areas.

That may have been true ten years ago, but it might not be true today. Why? Because competitive options for rural customers are out there. Take Blazing Hog, for example. The Houston-based company provides rural high-speed internet based on 4G technology. Furthermore, their service is available nationwide.

Given the choice to obtain internet access from a private company rather than a regulated utility, at least some customers will choose the former. That would mean even less opportunity to attract customers to the traditional ISP. If a broadband provider is already concerned about limited market share, those concerns are only heightened by wireless options.

The Free Market Influence

We could look to landline telephone service to get an idea of how the broadband market will work a decade from now, should we choose to not regulate it like a utility. Believe it or not, telephone service used to be regulated the same way as electric and gas. But in the 1990s, the government loosened restrictions on telephone service. Competition quickly ensued and telephone providers began popping up all over the country.

Service didn’t suffer as a result of less regulation. Prices didn’t go through the roof, either. In fact, the only thing that killed traditional landline phone service was the cell phone. If the cell phone had not been invented, we would all still be using landline service.

Free markets served the telephone industry well. There is probably no turning the clock back on utility service, given the amount of infrastructure required to provide utilities. But we already know how regulating utilities has turned out. Regulating broadband in the same way may not be in everyone’s best interest.

One can make the case for or against regulation. It has its pros and cons. Yet in the end, we seem to have done pretty well every time we have kept government out of the way and allowed private enterprise to do what it does. Lack of regulation is why companies like Blazing Hog have the opportunity to compete for their share of the rural wireless internet market.