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Friday, May 5, 2006

Why Communications and Media Markets Will Probably Never Be Deregulated
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There was a time in my life when I was actually quite optimistic about the prospects for getting the heavy hand of government regulation out of telecommunications and media markets. This was around 15 or so years ago when I first started covering policy developments in this area. I'd go to work each day thinking that some day soon our lawmakers would come to appreciate the amazing technological and marketplace changes happening around us and then take steps to liberalize these markets, just as they had for other over-regulated sectors before (like airlines, railroads, banking, and so on).

That illusion was shattered one day long ago when a copy of the Federal Communications Bar Association (FCBA) directory first landed on my desk. The FCBA is the organization that was originally made up of the lawyers who practice telecom and media law. Since the early 1990s, however, many others (economists, consultants, lobbyists, engineers, etc.) have also been allowed to join. I don't remember how many people were included in that first FCBA directory I saw years ago, but I just got the 2006 edition and it contains over 2,700 names. (And there's also a huge directory of all the companies and organizations that cover these issues--including my own--included in the book).

Now don't get me wrong; the FCBA is not some sinister group with nefarious intentions. Indeed, quite the opposite is the case. As I flip through the pages of the annual FCBA directory, I see the names of countless friends and even current and former work colleagues. I go to the annual FCBA dinner each year and hang out with these folks on a regular basis (even in my free time). They're all good people. They have noble intentions. But the problem is that they all have different interests and the combination of those interests typically leads to the expansion of government control over the communications and media sectors.

This is why I became so demoralized when I first saw the FCBA directory years ago, and again grew miserable today when flipping through the latest edition. There is just no stopping the growth of the hoards of lobbyists, lawyers, economists, consultants, press relations experts, and so on, who are interested in this area (and who can also make a very nice living covering these issues!)

And there's a wicked self-perpetuating cycle of dependency at play here. The more these folks petition lawmakers and regulators asking for new law or clarifications of law, the more law gets created. As more law and regulation is created, more lawyers, consultants, economists and so on, are needed to figure out what it all means and how it all works. And when they all disagree about what it means and how it works, that leads to more congressional hearings and bill, more FCC inquiries and rulemakings, and then more lawsuits and court cases to adjudicate it all.

As a result, the scope of government meddling in this area just grows bigger and bigger. You say the Telecom Act of 1996 started to reverse that process? Poppycock. Over a hundred pages of legislation in that bill gave rise to tens of thousands of pages of new rulemakings at the FCC and in state public utility commissions. Just one FCC rule alone (the infamous "Local Competition Order") totaled 737 pages and contained more than 3,200 footnotes. It also spawned two Supreme Court challenges. Another aspect of the Telecom Act (the Communications Decency Act) led to a Supreme Court challenge as well.

Meanwhile, in the wake of the supposedly deregulatory Telecom Act of '96, EVERYTHING grew more bloated. According to Greg Sidak of Georgetown University, the number of pages in the FCC Record tripled in the wake of the Act. Sidak also found that FCC spending grew by 37 percent after the Act and that membership in the FCBA grew by a whopping 73 percent. Fittingly, Sidak entitled his study on the growth of the regulatory state in the post-Telecom Act period "The Failure of Good Intentions."

That title really hits the nail on the head and captures everything that is wrong with telecom and media policy today. In his many amazing books, Thomas Sowell, a great economist and an even better political scientist, often talks about the triumph of good intentions over good economics. It's a theme that F.A. Hayek and Milton Friedman both developed extensively before him. But Sowell has taken this analysis to an entirely differently level in books like "A Conflict of Visions: Ideological Origins of Political Struggles" and "The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy." Sowell teaches us that no matter how noble one's intentions might be, it does not mean that those ideas will translate into sound public policy. Nonetheless, since everyone believes their intentions are pure and their methods are sound, they petition policymakers to substitute their will for the will of millions of individuals interacting spontaneously and voluntarily in the marketplace. The result is an expansion of the scope of public decision-making and a contraction of the scope of private, voluntary action. As a result, mandates replace markets.

We see this lesson ignored every day in the world of communications and media law. Small armies of lawyers and lobbyists march down to the FCC or Capitol Hill on a daily basis proclaiming that they have a well-intentioned, pro-consumer plan that policymakers just have to adopt right now to save the world. On rare occasions, some brave soul at the FCC or in Congress actually let's out a peep and asks: "Well, since all these other plans keep failing, why don't we let markets work for a change and see what happens?" But they get quickly shouted down by the many other self-anointed guardians of "the public interest" (as they have defined it, of course).

So, as I sit here flipping through this year's FCBA directory thinking about all these well-intentioned folks who are petitioning their government at this very moment for something, I again wonder to myself: Who stands for freedom?

posted by Adam Thierer @ 11:17 AM | Communications , Generic Rant , Mass Media

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