V. A Market For Telecom Property Rights
In the past 20 years, deregulation of network industries has changed the corporate structure of transportation, utilities, energy, and telecommunications from regulated monopolies to "deregulated" enterprises (Peltzman and Winston, 2000, p.1-199). The traditional justification for regulation was that transportation providers, utilities, and communications carriers were “natural monopolies.” In earlier days, partly as a result of technology and competition, and partly through legislation, companies furnishing utility services were assigned discrete operating territories in which they were the sole provider of their particular service. This created a self-fulfilling prophecy about the monopoly situation of a regulated industry.
A recent example of deregulation, the Telecommunications Act of 1996, however, converted the publicly owned radio spectrum to private property and auctioned it to the highest bidders (Heldman, 1997). An interesting aside is that while broadcast licenses were and are valuable, they are not legally transferable. New licensees must receive their grant from the Federal Communications Commission (FCC). Now presumably, at least some portions of the radio frequency spectrum are transferable. Similarly, positive fiber optic easements, wireless cells, and microwave pathways have been created as communications passageways were transformed from public, or regulated, goods to market goods. Some of these corridors pass through private property invisibly, such as wireless, and others pass through almost undetected after installation, such as fiber optic cable. In the new competitive era, communications companies are vying for the same block of customers. For example, the FCC auctioned radio spectrum to two cellular telephone carriers in each market, thus dismantling the older service territories’ legacy of regulated monopoly.
As part of the Telecommunications Act, technologic imperatives and competition, communications carriers have been encouraged to pay market value monetary considerations for property rights associated with deployment of the new communications infrastructure. A byproduct of deregulation and the “information superhighway revolution” has been the creation of valuable telecommunications property rights. These rights are often real property, but may, through licenses, be intangible. Functionally, they are equivalent but many property owners prefer to reserve the real property rights while reaping the proffered rewards. This question of definition and categorization is likely a part of recent industry accounting problems, and will probably continue to be. Many government entities with commonly owned corridors, such as streets and public highways, where normally cable and fiber optic conduit might have been laid for a nominal fee, have attempted to redefine them as private property to exact rents from commercial enterprises. Incumbent telcos and government utilities are, however, exempt from the new deregulated regime (Rudell, 2000).