In a 6-3 decision rendered yesterday (6/27/2005), the United States Supreme Court ruled that cable companies DO NOT need to open their lines to competitors offering high-speed Internet service. The Court supported FCC regulations that exempt cable operators from such access obligations. This ruling could and probably would serve as a precedent if the STB ruled that existing railroads are not required to provide open access to any other operators.
When the economics are right, open access will happen, driven by market forces. Not having read up on the decision, it’s still a fair bet that the company asking for ‘open access’ just wanted to be able to support customers on the cable company’s existing plant, but for less money (to use the cable) than the cable company wanted.
If they had offered the cable company the ‘right’ amount of money in the first place, there never would have been a suit.
It is going away as an issue as more and more large rail customers make sure they are served by more than one railroad. They either build out to another railroad or get their Congressmen to twist some arms as the chemical shippers at Bayport, TX just did with the UP. In addtition the BLE, UTU, etc. are opposed to force competitive access.
Members of Congress, for the most part, just do not care about the issue.
It really isn’t an issue they can care about. Allowing open access is a taking of private property pure and simple. In such cases, the government must pay just compensation. Accordingly, Congress has no interest in open access because the amounts they would have to pay to the railroads now owning the tracks would be enourmous…
LC
However, it can’t be said that it is a dead issue on this forum.
Jay
You can never assume that just becuase something is a bad idea it is dead.
I don’t think the cable ruling would have any impact on a future rail access ruling one way or the other. There are a multitude of ways to get broadband into a household (cable, phone lines, wireless, and coming soon - broadband by powerline). Unlike the issues surrounding freight transportation modal comparisons, and tossing out 56k phone line connections for obvious reasons, there is no real best way or worst way to get broadband into your household. A wireless connection is by and large as good as a cable connection, which is just as good as DSL, which is just as good as the technology involving power line broadband, et al.
WIth freight transportation, there are considerable differences in efficiency and flexibility involving trucks, rails, barges, and airlines, and all the intermodal combinations therein. What is apparent (and what would probably be the driving force behind any future legislation and/or court decisions) is that all modes in the U.S. are open access with the exception of most freight railroads. When (not if) Congress addresses this issue, they will look at the longstanding open access of highway, waterway, and air corridors; the open access conversions of privately held pipelines, transmission, and telecommunication lines; and finally the open access rail conversions in Europe and Australia. Then they will take past vertical breakups of certain industrial genre’s such as the AT&T breakup and it’s ultimate effect on the evolution of the telcom industry. Finally, they will compare a vertical breakup of the Class I rail network with other suggested “remedies” to shipper complaints such as rate reregulation, and try and ascertain what will have the best possible benefits to consumers while having the least negative impacts on the industry itself.
After all that, the industry itself might find that a willing acceptance of the inevitable evolution of the railroad ideal is preferable to a retrenchment into the facile socialists solution of comprehensive industry r
When I say that open access will occur when the economics dictate, I am doing so under the assumption that the owners of the track will allow it, not that it will be dictated by the government or anyone else. The conditions will likely be available track capacity, lack of capability on the part of the track owner (not enough resources to handle available traffic), and acceptable (to both parties) reimbursement. Operation will be within the existing dispatch/control arrangements.
I seriously doubt you will ever see compulsory open access. As has been stated many times, we can’t afford it.
Really, if you think about it, aren’t trackage and haulage rights a form of open access? Granted, some of them are the result of agreements made years (and railroads) ago, but we do have railroads other than the track owner running trains over that track.
There are three aspects that must be differentiated regarding “compulsory” open access. I assume by the framing of the topic question that CSSHEGEWISCH is refering to either nationalization of the rail network, or a taking of private ROW via eminent domain and then a resale/auction to private infrastructure companies or a granting of the ROW to a public agency. Nationalization may or may not involve compenstation, whereas the latter does involve compensation, which is later reimbursed to the government when the ROW is sold or auctioned off but not reimbursed if the ROW is granted to a public agency. If the end result then is nationalization or public grant, you are right to state that such would be a huge expense for the government.
Of course, we could achieve open access without such an expensive tact. One option is to regulate only the infrastructure portion of the Class I rail network (while leaving the rolling stock operations unregulated, e.g. no rate regulation), which would allow for dictation of fee for use, making the infrastructure
FM wrote:
“Of course, we could achieve open access without such an expensive tact. One option is to regulate only the infrastructure portion of the Class I rail network (while leaving the rolling stock operations unregulated, e.g. no rate regulation), which would allow for dictation of fee for use, making the infrastructure division a de facto utility. Another option is to break up the Class I rail companies into infrastructure and transporter companies via antitrust legislation, then progress to utility oversight of the infrastructure companies. Either way, such a move would finally put the rail industry on the road to modal equalization with highways, waterways, et al, e.g. the rest of the transportation world. Then and only then will we find out if railroads have been underperforming in comparison to the other transport modes in terms of market share.”
This again amounts to a governmental taking of the property rights of the railroad owners and falls to the same issues raised above, namely, we can’t afford it. You don’t have to completely nationalize to perpetrate a constitutional taking of private property giving rise to a requirement for adequate compensation. Sorry, reregulation that tells someone how they can use infrastructure is a de facto taking. So is dictating to any railroad how they can run their business. It won’t work.
LC
futuremodal: Can you explain to me how “compulsory open access” would last beyond the inevitable day that a train from Company A falls off tracks owned by Company B and causes a multi-zillion dollar liability lawsuit?
Now wouldn’t THAT be a special kind of contest.
Hmm, all the railroads in this country are worth about 85 billion. Politicians who run on a platform to raise taxes for greater government regulation don’t tend to fair too well in the polls.
I think I am going to have to go with LC on this one.
Gabe
After the Supreme Court ruled in favour of Eminent Domain, anything is possible isn’t it. I don’t know if open access will be the future but that kind of move makes it a little more likely then before.
I don’t think that Supreme Court ruling will ever affect the rail industry. All they really did was define internet access as an ‘information service’ instead of a ‘communication service’ such as telephone services. Communication services are required to provide access to competitors because of the former Ma Bell monopoly.
Railroads would never block cars from other carriers on their lines simply for economic reasons. It is much more economical to provide trackage rights than to transfer cargo between cars several times.
Attaboy: You appear to be confusing open access with interchange. Railroads have been interchanging cars among themselves almost since Day 1 and an entire set of rules and bureaucracy have come about to govern this practice.
Railroads have always been subject to Eminent Domain, and the Supreme Court holding to which you refer didn’t affect things at all.
Gabe
Yes but what about open access? Can a private corporation with the licence to operate trains demand access to the line; willing to pay even if the railroad doesn’t want them on it as themselves? Could say Wal-Mart operate a roadrailer (theory not reality) from point A to point B on BNSF’s line and pay them money because of the court’s ruling if the government awards them the right to claim eminent domain?
No, eminent domain is about taking land. Open acces would be using someone’s property because the government forces it. It would be like K Mart saying WalMart has a great location and the government forcing WalMart to let Kmart set up shop inside the WalMart to increase competition.
Be careful what you wish for?
Assuming we got past all the legal issues and had open access, what would stop the Asian shipping companies from running doublestacks themselves? UPS flys their own planes so why not run their own trains? And if utilities did the same and started running their own coal trains, what would happen to freight rates for small or seasonal shippers?