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Thursday, April 21, 2005

"Hill Ponders Regulating Convergence": A Note on the Proper Way to Solve "Level Playing Field" Concerns
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Yesterday's House Telecommunications Subcommittee hearing confirmed some of my worst fears about government regulation of new technologies / media, which I had discussed on Tuesday in this post.

Today's Broadcasting & Cable includes a story about the hearing with the perfect title: "Hill Ponders Regulating Convergence." That's exactly what's going on here with Congress and the FCC considering how to "level the (regulatory) playing field" as everyone tries to get into everyone else's business. Illinois Republican John Shimkus is quoted in the story and what he said also frames the issue quite nicely: "How do we restructure the FCC to meet the new technological age. How do we justify different regulatory schemes when you are all competing in broadband."

The answer here is simple in theory but difficult to implement in practice. The solution to "level playing field" policy problems should be to deregulate down, not regulate up. That is, don’t try to put everyone on equal legal footing by imposing all the old, inefficient regulations and taxes on new services, technologies or competitors. Instead, various industries should work together to reduce these burdens or eliminate them altogether for all parties.

Of course, that is probably wishful thinking in two respects. First, many industries, who have already been slapped with all the old regs and taxes, will assume there is no way to get rid of them all. Thus, they figure the only way to level the playing field is to atleast make sure that new competitors or rivals face the same burdens. Second, and worse yet, some industries already facing the old burdens will realize those same taxes and regulations they have fought for so long can now be used as an entry barrier to thwart new rivals or technologies.

Any way you cut it, this is going to end badly for industry and consumers alike. For industry, if they don't work together then they will hang together. Efforts by some to level the playing field by regulating everyone up to the same level will simply burden all carriers with more regulation and taxes and open the door for more government meddling in the future. Think of it as Mutual Assured Destruction for the Information Age.

For consumers, a MAD policy of leveling the playing field in the direction of more regulation will mean less innovation and choice. Our public officials should be taking steps to benefit consumers by opening markets to new competition, not simply trying to regulate every new provider or technology that comes to town.

It is my hope that the industries in question here--cable, telecom, and broadcasting--will find a way to make peace on this issue and avoid a MAD conflict that will leave everyone, including them, worse off. Instead of asking government to regulate converging technologies and markets, work together to achieve regulatory parity by deregulating down to a simple set of limited rules for all players. That's the pro-innovation, pro-consumer policy America needs today.

posted by Adam Thierer @ 9:57 AM | Cable , Communications , Mass Media

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