How to Lower Home Heating Prices
With winter coming to an end, many people are happy about heating prices coming to an end, at least until next winter. Several states are now talking about taking legal action against natural gas producers claiming that they unfairly charged a higher price for natural gas. Those state Attorney Generals are hoping that a court will order more regulations over the energy industry to prevent future price spikes. How well will this work? Let’s consider a recent conversation I had with my mother.
The other day I called my mother. I called to tell her that I had gotten a brand new digital phone, now I have a new phone number. A few years ago, I got rid of my land line because my cell phone was cheaper. With digital phone, I get free caller id, free voice mail, free 3-way calling, and free long distance. So that 45 minute phone call I had with my mother was free. These are things that a traditional land line carrier charges for.
I got to thinking about long distance calling in the past. In 2000, all the rage was using a long distance prefix to get a cheaper rate (remember 10-10-220?). My 45 minute phone call would have cost me $4.14 with their service (plus taxes). In 1995, Sprint had a huge marketing campaign about long distance calls (intrastate only) for 10 cents a minute (what a bargain, at the time). My conversation would have cost me $4.50 (plus taxes). In the mid 80’s, if that call had been made before 7:00pm during the week, that call would have easily run 35 cents per minute ($15.75). If it was after 7:00pm, but before 11:00pm, then that call would have been closer to 20 per minute ($9.00), and 15 cents if I stayed up past 11:00pm (cost $6.75, and my parents are usually asleep then).
What caused this? In 1982, and again in 1984, the government broke up the monopoly that AT&T had over local telephone and long distance service (it was a government mandated monopoly). This allowed companies like Sprint and MCI into the telecommunications field. Competition helped drive down the price, fewer government regulations meant less overhead costs to do business, and smaller competitors could more easily enter the field (now companies like T-Mobile are founded). This mean more competition. And competition drives down prices and drives up innovation. In 1985, who would have imagined one could use their computer to make free long distance phone calls.
Now in this age of communications, some companies have discovered that they can offer phone service over high-speed internet connections. This phone service can be offered at a fraction of the price of a traditional landline. In fact, my monthly bill is about the same as what I paid in 1996 for basic phone service (long distance not included).
When the telecommunications industry was run with huge regulations, the service was expensive (and I won’t even go into the quality of service one received). Now why would one expect more regulations to be good for natural gas service? Gas and electric service is already one of the most regulated industries in the country. One has to wonder, if true deregulation works for telecommunications, what is the logic behind adding even more regulations to gas providers? My phone bill is low. In fact, 2 years worth of phone bills is about how much I pay during this past winter for only one month to CG&E. To help out the consumer, why doesn’t the government do to Gas and Electric what they did to phone service?
The other day I called my mother. I called to tell her that I had gotten a brand new digital phone, now I have a new phone number. A few years ago, I got rid of my land line because my cell phone was cheaper. With digital phone, I get free caller id, free voice mail, free 3-way calling, and free long distance. So that 45 minute phone call I had with my mother was free. These are things that a traditional land line carrier charges for.
I got to thinking about long distance calling in the past. In 2000, all the rage was using a long distance prefix to get a cheaper rate (remember 10-10-220?). My 45 minute phone call would have cost me $4.14 with their service (plus taxes). In 1995, Sprint had a huge marketing campaign about long distance calls (intrastate only) for 10 cents a minute (what a bargain, at the time). My conversation would have cost me $4.50 (plus taxes). In the mid 80’s, if that call had been made before 7:00pm during the week, that call would have easily run 35 cents per minute ($15.75). If it was after 7:00pm, but before 11:00pm, then that call would have been closer to 20 per minute ($9.00), and 15 cents if I stayed up past 11:00pm (cost $6.75, and my parents are usually asleep then).
What caused this? In 1982, and again in 1984, the government broke up the monopoly that AT&T had over local telephone and long distance service (it was a government mandated monopoly). This allowed companies like Sprint and MCI into the telecommunications field. Competition helped drive down the price, fewer government regulations meant less overhead costs to do business, and smaller competitors could more easily enter the field (now companies like T-Mobile are founded). This mean more competition. And competition drives down prices and drives up innovation. In 1985, who would have imagined one could use their computer to make free long distance phone calls.
Now in this age of communications, some companies have discovered that they can offer phone service over high-speed internet connections. This phone service can be offered at a fraction of the price of a traditional landline. In fact, my monthly bill is about the same as what I paid in 1996 for basic phone service (long distance not included).
When the telecommunications industry was run with huge regulations, the service was expensive (and I won’t even go into the quality of service one received). Now why would one expect more regulations to be good for natural gas service? Gas and electric service is already one of the most regulated industries in the country. One has to wonder, if true deregulation works for telecommunications, what is the logic behind adding even more regulations to gas providers? My phone bill is low. In fact, 2 years worth of phone bills is about how much I pay during this past winter for only one month to CG&E. To help out the consumer, why doesn’t the government do to Gas and Electric what they did to phone service?
posted by CincinnatiLibertarian at 11:20 AM
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