An agency committed to restraint of trade and oligopolies
This is what I call “Change You Can Believe In.”It’s long past time to scrap the Federal Communications Commission, an agency committed to restraint of trade, oligopolistic business practices, and the dogmatic, self-justifying, and utterly wrong insistence that bandwidth is a scarce commodity. That’s the essence of a blistering critique in today’s Wall Street Journal “Opinion Page” by Andy Kessler, a former chip-designer, former technology analyst for Wall Street, and founder of a Silicon Valley VC company.The full article, “Time to Shut Down the FCC,” is technically behind the WSJ paywall, but it can be accessed in full from a Google search page.Kessler was provoked by yesterday’s vaguely worded but ominously determined speech by FCC Chairman Julian Genachowski, who is making his latest push for the ill-conceived and incoherent idea of “net neutrality.” To Kessler, this means that the Internet should be “free and open,” which is an “absurd notion” because building and running and improving it is “quite expensive.”He argues that the FCC lacks the legal authority to regulate the Internet (a position affirmed by a U.S. Court of Appeals ruling earlier this year). What’s more, he says, the FCC has a long history of restraining trade, a history shaped by the institutional prejudice that radio spectrum is scarce and by the institutional hubris that the FCC knows what’s best for us. The combination, Kessler says, resulted in long delaying FM radio (by favoring AM and television with spectrum allocations), creating the long-standing network TV oligopoly (by restricting station ownership), and keeping long-distance phone rates high for decades (by requiring operators to subsidize local telephone costs).That history forms an ironic and unintended commentary on Genachowski’s words, quoted by Kessler: “No central authority, public or private, should have the power to pick which ideas or companies win or lose. That’s the role of the market and the marketplace of ideas.”Kessler, in effect, argues that Genachowski’s appeal to “the market” is hollow, because neither his words nor his proposals show any appreciation of or place for what is at the heart of any market: competition.”By discouraging competition in local access and refusing to change arcane licensing rules, this regime would freeze in place Google, Comcast, Verizon Wireless and ESPN just as the next wave of services will emerge to delight us,” Kessler writes. Welcome to the Digital Oligopoly.That’s already happening: fiber communications provider Level 3 recently signed a contract with Netflix to stream movies-on-demand over the Internet to Netflix subscribers, some of whom are also among Comcast’s 17 million cable TV subscribers, whom Comcast has no intention of losing to alternative content providers. Now Comcast has levied higher fees http://www.computerworld.com/s/article/9198498/Comcast_demands_fees_for_Web_movie_viewing_Level_3_says on Level 3 traffic, and Level 3 is complaining: ironically, it’s arguing that Comcast is violating net neutrality principles.Kessler predicts, almost certainly accurately, what the FCC’s response will be: more rules, such as mandating that movies stream flawlessly between 9-11 pm. And then more rules to deal with the controversies and problems created by the new rules.The one solution genuinely in the consumer interest is: end the cable TV monopolies. Doing so will let alternative providers enter these markets with the one thing that’s guaranteed to change Comcast’s practices: competition for the only truly scarce resource — subscribers’ cash.The staple narrative of net neutrality advocates and “Law and Order” scriptwriters is: we need to be protected from rapacious, piratical capitalists who will go to any lengths for higher profits. Would that such capitalists existed. In fact, too many businessesmen cringe at the fortitude, ruthlessness, sheer brass, and even joie de vivre needed for real capitalism. They are willing, even eager, to become mercantalists, all too ready to accommodate agencies like the FCC and substitute rent-seeking http://en.wikipedia.org/wiki/Rent_seeking and the status quo for risk and innovation.
