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NTU Supports H.R. 2726, the Preserving Innovation in Telecom Act

June 21, 2005

The Honorable Pete Sessions
United States House of Representatives
1514 Longworth House Office Building
Washington, DC 20515

Dear Representative Sessions:

On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write in support of your legislation, the Preserving Innovation in Telecom Act, (H.R. 2726), which would assist consumers in accessing telecommunications services while spurring innovation and preventing the wasteful and duplicative use of taxpayer dollars.

Simply put, H.R. 2726 would prohibit state or local governments from offering telecommunications services in any geographical area where a private entity is already offering a substantially similar service. It would, however, allow state or local governments that are already offering services on the date of enactment of this legislation to continue doing so.

Increasing numbers of municipal governments are using taxpayers' money to enter the telecom business in direct competition with established firms. Obviously, forcing taxpayers to underwrite the costs of developing new telecommunications systems from scratch violates the basic principle that governments should avoid entering markets where private firms are actively competing. Worse, engaging in these activities takes resources away from the basic public services for which state and local governments have been traditionally responsible, and could lead to higher tax burdens.

Aside from harming taxpayers, allowing municipalities to compete in the telecommunications marketplace is unfair to existing providers because governments control the local regulatory environment and the rights-of-way for creating these networks. The ability to use taxpayer money or excess cash from utility operations makes doing business even more difficult for existing private-sector providers competing in the same region. In the long run, the development of local monopolies held by government-owned infrastructure providers will surely become an impediment to innovation and the provision of new services, not to mention a burden on state and local taxpayers.

NTU strongly supports an innovative, free market in all areas of the American economy. We also believe that governments at all levels should not compete with private industry. We look forward to working with you to pass this important piece of legislation.


Paul J. Gessing
Director of Government Affairs