Flailing Telecoms Seek Broadband Deregulation

Just how bad are telecom companies doing? If you listen to Matthew Flanigan, president of the Telecommunications Industry Association, the sector is unstable and in a rut, and needs the feds to provide a quick pick-me-up. The situation looks dire. In the past three years, telecom equipment makers and suppliers have eliminated 600,000 jobs and amassed $1 trillion in debt.

Flanigan wants President Bush to endorse a national broadband policy that the trade group leader says will kick-start a rebound and let the United States catch up with Britain, Canada, Japan, and Korea in broadband use. No word yet on the president's response.

In a five-point plan, the TIA last week called for the government to deregulate broadband as well as provide tax incentives for deployment and money for research and development. The association contends that every job created in telecommunications would result in four new jobs in related industries.

Maybe, says James Forcier, managing director at the economic consulting firm Bay Analytics, but would this be the best way to spend tax dollars? The proposal seems to be a bailout for bad decisions made during the dot-com boom, when many telecoms overwired the country with fiber--much of it still unused--and went on buying binges, acquiring companies that failed to prove profitable, Forcier says.

Plus, he says, "the government has a poor track record picking winners and losers for targeted tax cuts."