Monday, January 31, 2005

Free-Market Wireless Beats Government Telecom Monopoly

An amusing front-page story today in the Daily Progress (Charlottesville, Virginia) reports how University of Virginia officials lament the multiplication of cell-phone use among students who live in the dormitories on grounds.

It seems that for years, the University ran a monopoly on telephone service for dorm rooms, providing land lines and charging a premium price for long-distance service. The monopoly pricing was incorporated into the University's budget, with the money going toward telecommunications infrastructure projects.

What the University did not count on was the desire for freedom -- freedom to choose, freedom to move -- on the part of students, who increasingly use cell phones to communicate both locally and distantly with friends and loved ones. Consequently, the revenue from long-distance phone calls in dorm rooms has plummeted precipitously.

Reports Kate Andrews of the Daily Progress:

"The volume of student long distance calling has been dropping for many years," said James A. Jokl, director of UVa’s communications and systems. "I suspect many reasons, including e-mail and calling cards in the past and additionally cell phones more recently."

In the 1997-98 academic year, students spent more than 5 million minutes making long distance calls. That rate fell to 600,000 minutes last year, bringing in only $30,000.

Look at those numbers: Long-distance call-minutes have diminished to only 12 percent of their numbers of only seven years ago.

This may be a small example, but it is one more strong piece of evidence that, when government creates or facilitates a monopoly, some competitor in the private sector will come along to undercut prices or provide better service. Monopolies cannot and will not (and must not) be maintained.

U.S. Postal Service, take note.


Tim said...

They already have. E-mail has cut considerably into USPS mail volume, and private delivery services have absorbed much of the package business (especially in terms of international shipping). The post office cannot be what it was.

Anonymous said...

We dorm-dwelling types still lament the lack of FedEx/UPS and other private parcel services... for example GMU only makes provisions for packages shipped USPS. $8.50 for a small box, and slow delivery. -RM

jon said...
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