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Telcos Players in the U.S. Set to Become Even Lazier

With all of the current turbulence in the American society, it is no wonder that its telecommunications market is also under severe pressure.

In his election campaign, Trump promised his American supporters to make changes to what he called the Washington swamp, but it has become clear that the opposite is happening. While in previous Administrations lobbyists were at least somewhat separated from the politicians, now many of these lobbyists are actually part of the Trump Administration. The grovelling that took place at a recent Trump Cabinet meeting says it all. Obviously, the Trump team that is now sitting front-row at the trough can’t believe their luck. They now have positions of such influence in relation to their incumbent businesses, be it oil, energy, pharmaceuticals or telecommunications.

Regarding telecommunications, two key policy changes stand out. One is the winding down of privacy laws, allowing (tele)communications companies to basically do what they like with the private data they collect from their customers—true, some other more generic legislation still applies, but people have little control over what happens with their own personal data.

The other issue is the withdrawal of the net neutrality regulations. This goes to the core of the telecoms industry in America. In reality net neutrality itself was a bit of window-dressing, the key issue behind it being regulatory control over the American incumbent telcos. They call themselves ISPs and have clearly lobbied the Administration in 1996 to declare broadband a content service rather than a telecommunications access service, as such suddenly freeing themselves of most of the telecoms regulations that look after equal access, wholesale requirements, pricing and competition in general.

The net neutrality regulation would have at least given the FCC some new tools to regulate the incumbents in the context of telecommunications—that was the main reason the carriers hated the net neutrality legislation. With Trump in charge little was needed to get him to reverse the legislation and give the power back to what are basically the three telecoms monopolists in America: AT&T, Verizon and Comcast.

This will further reduce American leadership in this market. First of all, American companies such as Google and Facebook have simply taken a different route. They are bypassing the incumbents as much as possible and significant investments in wireless technologies are now being made by these internet-based companies that will give them even more independence from the telcos.

International telecoms leadership has moved to Asia, with Korea, and increasingly China becoming the new innovators in the market.

Domestically America has been dropping down the international ladder regarding the quality of broadband (speed) and is now sitting somewhere in the middle of the western economies, after having had the number one or two spots for most of the 1990s and early 00s.

With more regulatory relief for the incumbents most certainly on the way from the Trump clique, there will be even less incentive for them to innovate and compete, and America will just drop further down the international ladder. This will have a significant long-term effect on social and economic matters, which are being more and more underpinned by a healthy, competitive and high-speed broadband infrastructure.

Telcos will not be stimulated to innovate and compete. They will become lazier and lazier, using the monopolies to simply increase their prices and milk their traditional services as much as possible, since there will be no pressure on them to ensure that America does get better telecoms networks like those that are being built in the countries of many of their trading partners, and this will isolate them even further from international developments.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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