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Internet Anarchy and the Swedish DSL Market
People say Internet is in essence a digital anarchy, and
that might be so. But the suppliers of this “anarchy” have a lot in common with
the state and its bureaucracy. Not only is the greatest supplier of DSL internet
connectivity in Sweden as well as the owner of the telecommunications infrastructure a state-owned
company, the competitive arena for supplying customers with internet
connections is a maze of rules, regulations, and court orders making the former
Soviet bureaucracy seem streamlined.
Sweden has seen quite a few improvements for customers in the telecommunications
industry since the state telephone agency was incorporated under the name Telia
in 1993, and even more since the market was deregulated soon thereafter. But
even though the market for telecommunications services now benefit from healthy
competition, the physical infrastructure is still a monopoly. At the time of
deregulation of the market, the incorporated state telephone agency was given ownership
of all phone lines and switchboards, thereby giving it an unnatural competitive
advantage.
This existing imbalance in the marketplace is increasingly
noticeable, especially considering the rising demands for hardware-dependent
internet connection services such as ADSL. To set up an ADSL subscription a
supplier does not only need access to the copper cable telephone lines through
which signals are transmitted from the supplier to the individual customer. The
supplier needs also access to the switching station in order to install a
sending/receiving device, and this is a service supplied by the owner of the
phone line system.
The latter has proven to be very problematic, since the
owner of the phone line infrastructure and thus the company installing the
sending/receiving devices is also the state-controlled supplier of DSL internet
connectivity competing for market shares: Telia. Telia claims to be unable to
service all switch stations as quickly as its competitors (and customers) demand,
the demand is simply too high and the growth in the market too fast and too
extensive. Competitors claim Telia cannot deliver what is promised and that the
fees charged for the “service” are kept at too high a rate. Also, customers of
Telia’s usually get serviced a whole lot faster than competitors’.
This is the situation at present and it has been about the
same since the beginning deregulation of the market a decade ago. Even though a
special government agency, Post- och telestyrelsen (PTS), has been given the authority
to “fix the problem” there is not much change. Each time PTS makes a decision and
seeks to enforce it, it is appealed by Telia to the courts and thereby
postponed for years.
Recently a new problem has emerged that is of great interest
to classical liberals and advocates of property rights. The PTS claimed in 2004
that Telia must let all competitors have equal and instantaneous access to the
phone lines in order to make the internet connectivity market fully
competitive. Telia appealed but lost
in the court hearings in early spring 2006. Telia then appealed to a higher
authority--but lost again in July.
The situation looked very promising from the perspective of
Telia’s competitors until Monday July 31st, when the even higher
authority Regeringsrätten announced it will take up the matter for another
round of hearings. This should mean this court is not fully satisfied with the
decisions of the previous courts or that there are perspectives or facts previously
not having been considered of enough importance. This announcement means that
the whole thing is not yet settled, even though one government agency and two
levels of courts have ruled the very same thing. This also means that nothing
has changed--the competition is still held at a leash by Telia.
From a property advocate’s perspective, this issue is even
more troublesome. Even though competition in the marketplace should be a
preferable state, so is the rule of law and protection for property rights. And
as things are, the phone lines are owned by the state-controlled corporation
Telia--and they are putting a lot of effort into keeping competition at a
distance.
So what we have is a situation where it is impossible to
take sides based on ideological reasoning. On the one side are the private companies
wanting to compete on equal terms with the state-controlled giant that has got
legal ownership of the infrastructure. But what the private companies are actually
calling for is competition at the price of property rights--they want the
state to coercively annul property rights for another public corporation,
Telia.
On the other side is Telia, a state-controlled public
corporation which has “inherited” the telecommunications infrastructure from
the state telephone agency (Telia’s predecessor). Even though its property
rights should be defended, it is in this case a troublesome issue since the
physical infrastructure was once built with taxpayers’ money by a government
agency. The infrastructure should therefore, at least theoretically, be in the public
domain rather than be private property, but its legal status has changed after
having been given free of charge by
the state to the corporation Telia. Furthermore, Telia is using taxpayers’
money in order to defend its property rights to this infrastructure in the
courts so that they can avoid competition--by other companies paying taxes
(and thereby being theoretical part owners of the original infrastructure).
This situation is nothing but a complete mess, and it
doesn’t seem to ever be straightened out by courts nor agencies. And from a
classical liberal viewpoint, neither can the private companies, since this is a
mess created by a malfunctioning process of part deregulation of a former 100 %
state-controlled “market.”
It seems this part of the Internet, at least, certainly has
nothing to do with anarchy. But it has a lot to do with chaos.
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