Wednesday, April 17, 2013

Don't Let the U.S. Become Over-Regulated Like France

Many critics of U.S. regulatory policy point to Europe as an example of how the FCC and other agencies should intervene in the telecommunications market and other industries.  However, the Washington Post recently reported that in France, Italy, and Greece citizens feel “strangled” by the over-regulation.  Over the past two decades, Europe’s pro-regulatory bent has stifled economic growth, especially in the face of the continent-wide recession.
In France, for example, bureaucrats have issued approximately 400,000 regulatory directives which include demands to widen sidewalks to permit two wheelchairs to cross paths without bumping, trim tree branches six feet up their trunks, and allow only government-certified technicians to change light bulbs on city property, among others.  These directives have cost small towns like Albaret-Sainte-Marie more than $2.5 billion over the past four years, and have cost the European private sector 3.7 percent of GDP annually ($10 billion in France’s case). 
According to the Organization for Economic Cooperation and Development (OECD), advanced economies, which traditionally favor a more “hands-off” government generally thrive and experience greater economic growth more than countries that over-regulate. 
In reaction to developing marketplace competition and ongoing technological changes, Congress passed the Telecommunications Act of 1996, which stated Congress’ intention for the FCC to "promote competition and reduce regulation."  The FCC should be cognizant of the pitfalls of over-regulation encountered in France and throughout Europe. Having these pitfalls in mind, the FCC should reduce regulation commensurate with the development of competitive markets in order to effectuate the intent of Congress and to promote economic growth and consumer welfare.
One key way for the FCC to eliminate, or at least reduce unnecessary regulations, would be for it to exercise its forbearance authority more generously. For more background on the FCC's forbearance authority, and for more on the need for reform of the forbearance process, see FSF’s Randy May’s blog, Don’t Forbear Any Longer From Forbearance Reform!  This post and other releases from FSF scholars explain how reforming the forbearance process will offer an avenue for spurring the FCC, more regularly, to grant justified regulatory relief that comports with the competitive realities of today's digital marketplace environment.