Denmark Proves We Don't Need the FCC

By nearly eliminating their equivalent of the Federal Communications Commission, Danes now enjoy some of the best IT and telecom services on earth

By Andrea O'Sullivan of Mercatus. Excerpts:

"Denmark in particular is praised for its stellar telecommunications services. The country has topped the International Telecommunications Union's ranking of global information and communication technology (ICT) provision for years due to its expansive broadband and wireless penetration, fast Internet speeds, and ample provider competition."

"So how did Denmark do it? Deregulation. By virtually eliminating their equivalent of the Federal Communications Commission (FCC), Danes now enjoy some of the best ICT service on the planet.

A new Mercatus Center working paper by Roslyn Layton and Joseph Kane describes precisely how Danish telecommunications officials undertook successful deregulatory reforms. It starts with Danish regulators who quickly understood the promise of digital technology and realized that government policies could quash innovative applications that would benefit consumers and businesses alike. From there, they developed a plan to prioritize competition and development instead of central control. This hands off-approach was so successful that eventually the country's National IT and Telecom Agency (NITA) was disbanded altogether."

"Policymakers clearly stated their opposition to subsidy-driven "growth" and heavy-handed regulation. The country's state-owned telecommunications provider, Tele Danmark (TDC), was completely privatized in 1998 through the efforts of Social Democrat Prime Minister Poul Nyrup Rasmussen. The next year, a consortium of Danish political parties formed a "Teleforlig," or telecommunications agreement, that outlined their goals. It stated:

It is important to ensure that regulation does not create a barrier for the possibility of new converged products… Regulation must be technologically neutral, and technology choices are to be handled by the market. The goal is to move away from sector-specific regulation toward competition-oriented regulation.

And Danish regulators kept this promise. For example, following the privatization of TDC, NITA levied special regulations on the provider so that it would not abuse its previous monopoly to prevent new competition in wireless. TDC was therefore subject to controls on its access to mobile networks and call origins. But NITA discovered that the wireless industry was sufficiently competitive by 2006, with four active providers in the market. Remarkably, NITA then dissolved the TDC regulations. As one official stated, "We are obliged to remove the regulation when the competitive situation demands it. There is no need to regulate something that market forces can take care of."

By 2011, Danish ICT provision had become so competitive and responsive to market needs that NITA closed up shop all together. Interestingly, this major deregulation was not the undertaking of a wild-eyed free market party, but rather a consortium of the center-left ruling parties. Nor did the development make much of a splash in the public eye, receiving very little public press or debate.

According to those involved with the reform, there was simply no need to operate a specialized telecommunications regulator anymore. Plus, the existence of a specialized telecommunications regulator could lend itself to regulatory capture and corruption—why invite temptation? Hence NITA was disbanded and its limited regulatory functions were transferred to the general Danish Business Authority."

"Denmark's voluntary net neutrality system sparked a revolution in mobile-app development in the country. Meanwhile, countries that chose top-down net neutrality regulation have remained stagnant."