Section 706 of the Telecommunications Act of 1996 correctly recognizes the importance of broadband investment to the telecommunications sector and to the larger set of economic activities and goals it supports to advance. For this sector to make the maximum contribution to economic welfare and the broader public interest, the Commission must be aware of, and tailor its policies to, their effect not only on short term static economic efficiency, but also on longer term dynamic efficiencies as well. There is significant evidence that the current regulatory regime is insufficient to promote broadband investment, and is, in fact, precluding broadband investment, particularly in the local exchange. We strongly support the goal of the 1996 Act and the Commission's emphasis on breaking down long-standing entry barriers to telecom markets through competition policy. Rivalry among firms is the touchstone for rationale policy in this dynamic sector.
Workable competition holds the promise for improved economic performance.
ESI is steadfast in its support of the principle that regulatory policies should be designed to foster and promote competitive processes in sectors where market dominance and lethargic competition has long been the standard. Time and again, competition has shown itself to be the greatest promoter of innovation and investment. However, we are not convinced that competition policy alone, nor the particular manifestation embodied in current Commission policies, are either sufficient or the only way to assure high rates of capital formation and innovation in this sector. Competition policy is necessary but not sufficient to ensure optimal investment and innovation. The relationships between market structure and investment and innovation are not simple and easily specified linkages.