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News and comments on community broadband networks, the communities deploying them and the technologies that support them. Published by Denise Frey and Al Bonnyman.

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Thursday, August 28, 2003


How true: "A Lesson From the Blackout: Free Markets Often Need Rules"

"Federal Agencies Attack Mistakes In Electricity, Broadband and Others"

This is an excellent article in the Wall Street Journal by David Wessel. (Unfortunately, it requires a Wall Street Journal subscription to access it.) As someone who's worked in the intersection of both power and telecom for many years, this is a great explanation of what's been wrong and what's been right about deregulation in both markets.

Here are some excerpts:

"The blackout of 2003 offers a simple but powerful lesson: Markets are a great way to organize economic activity, but they need adult supervision."

"In the battles of communism vs. capitalism and rigid regulation of economic activity vs. competition, the market won. Despite persistent diatribes from the left, there is little prospect that the U.S. government is going to reinstate old regulations that once dictated how much airlines or stockbrokers could charge customers or determined which long-distance phone company could serve a particular place or shielded owners of power plants from losing business to more-efficient competitors."

"The spread of markets, however, is increasingly focusing attention on the need to make them work well -- or risk blackouts, bankruptcies and backlash. Spectacular failures, such as the blackout, put market advocates on the defensive, including market-loving Republicans who control the U.S. government. They are now turning from advocating markets to fixing them."

Wessel goes on to write about the Bush administration's efforts to make partially deregulated markets work, quoting FERC chairman (and long-time Bush confidante):

"Our support for markets must not be based on blind faith ... California will be a constant reminder that poorly designed markets can fail miserably. Ideology alone will not capture the benefits of competition while preserving customer protections."


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