Legislating economics

Blogging over at AZTALK, Robert Robb, Arizona Republic columnist, reports that a state legislator is going to introduce legislation restricting how cell phone companies can compete. He notes that while legislators can change laws, "They don't, however, have the power to repeal or suspend the laws of supply and demand."

Would you support legislation requiring cell phone companies to charge more for their phones?

I assume few people would.

How about legislation forbidding cell phone companies from requiring a contract extension to get a new cell phone and limiting all service contracts to just a year?

I suspect many people would say, sure.

In reality, they are the same legislation.

State Sen. Jim Waring is mad at his cell phone company and plans to offer legislation restricting service contracts and their extensions. The inevitable result of such legislation will be higher costs for phones.

Meanwhile, Verizon is going to unbundle phones from their service.

In a major shift for the mobile phone industry, Verizon Wireless said yesterday that it planned to give customers far more choice in what phones they could use on its network and how they use them.

While there are technical limitations involved, the company’s move could lead to an American wireless market that is more like those in Europe and Asia, where a carrier’s customers can use any compatible phone to easily reach a wide array of online services — and take their phones with them when they switch companies. The move, which surprised industry watchers because Verizon Wireless is known to be highly protective of its traditional business, is part of a larger shift in the communications world.

It appears that the market is ahead of the proposed legislation.

HT: Megan McArdle