Well, here we go again. Not satisfied with the prospect of merely regulating the broadcast television and radio airwaves, Congress is poised to again introduce legislation that would extend indecency regulations to cable and satellite television. Broadcasting & Cable magazine reports today that Rep. Dan Lipinski (D-Ill.) and Tom Osborne (R-Neb.) are introducing a bill, "The Family Choice Act of 2006," that would try to control cable content by giving the industry a choice among three regulatory approaches.

The bill would require multichannel video providers to choose one of three options:

1) apply FCC broadcast indecency standards to their own programming;
2) offer channels a la carte so subscribers could choose not to take certain channels; or
3) offer a family-friendly tier that meets the definition supplied in the bill.

Wow, now how's that for a devil's choice! But cable or satellite providers shouldn't be forced to pick among these poisons because government has absolutely no rational legal or philosophical basis for imposing censorship on pay-TV providers. As I noted last June in a Washington Post editorial:

A NewsFactor report on a service that provides hands-free access to e-mail while driving suggests this is a bad thing, that we don't need any more distractions. But I'd much rather somebody be listening to their e-mail than fiddling with their BlackBerry while guiding the steering wheel with their elbows. I've seen plenty of drivers doing that here in DC, so if they are at least looking at the road while dealing with e-mail that's an improvement. Of course, we're already seeing innovations to help CrackBerry addicts avoid the "BlackBerry dunk."

What would you do if someone offered you a million dollars? What if all you had to do was give the person $200,000 in return? Assuming this isn't being offered as part of a Nigerian e-mail campaign, I'd bet you'd think that was a pretty good deal and scramble to gather up $200,000 as best you could. That's what rational people would do. But people aren't rational. If they don't see the million dollars in front of them -- lots of bound packets of $100 bills sitting in a briefcase -- they're going to be skeptical, and they're likely to say the dealmaker is just trying to scam them out of $200,000.

Okay, maybe that behavior is rational. But there is a long history of evidence that reducing trade barriers means more money for everybody; it's not a reallocation of the pie, the pie itself gets bigger. Everybody wins. We've known this for hundreds of years, and probably no one has expressed it better than 19th century economic journalist Claude Frederic Bastiat. But trade does require a bit of a leap of faith among its practitioners, and there has to be a recognition that one can't discriminate on the basis of nationality. The latest Doha Round collapse suggests much of the world, developing and developed, still hasn't learned that lesson, and the reckless comments in Congress in recent months on port deals, laptop sales and the latest free trade agreement suggest we have a lot to learn here too.

In my college days, I majored in both journalism and political science, but I briefly flirted with the idea of a major in psychology as well. (Actually, I was just trying to extend my college partying days as long as possible but I ran out of money!) While I was briefly flirting with the idea of a psychology major, I took a psyc class that featured a brief discussion of a subject that would forever change the way I look at the world and media issues in particular: "third-person-effect hypothesis." Simply stated, the hypothesis predicts that people tend to overestimate the influence of communications / media on the attitudes and behavior of others relative to themselves. For example, many people will see media "bias" where there is none (or very little) and they will often advocate a "re-tilting" of the news in their preferred direction. (Incidentally, in case you're wondering, there's plenty of research to back up the thesis.)

When I first read about this hypothesis, I experienced a profound personal epiphany; a real "ah-hah!" moment that helped me finally unlock the secret to why so many people alleged media bias where I personally saw none. Specifically, it helped me understand why good friends of mine on both the political Left and Right saw different forms of bias in the exact same news. As someone who was, and remains, rabidly independent (I've never voted for either major party in my life and I doubt I ever will), I was always fascinated by this. When I sat down with classmates, friends, roommates or others to watch the news, I witnessed endless bickering among them about supposed slant one way or the other. But, with a few exceptions, I never quite saw or heard that bias myself. I'm not saying that all news is perfectly unbiased, it's just that a large percentage of the time it is not biased and yet people argue that it is, but in decidedly different ways and directions.

What explains this? The answer is "third-person-effect hypothesis" and "hostile media effect" theory. To explain, let me step back and begin by telling you what got me thinking about this again.

Many years ago, I largely quit following developments on the "universal service" front. It was just too damn demoralizing. After studying the system for many years, I came to the conclusion that the Universal Service Fund (USF) - - and the entire universal service regulatory process - - was one of the most unfair, illogical, counter-productive, regressive, anti-technology programs EVER created in American history, And yet, no one in government seemed to be willing to do anything to fix it. Matter of fact, they actually decided to expand it in recent years with the creation of the E-Rate (or "Gore Tax") program. And they brought cellular and VoIP into the system as well. Absolutely insane.

I was reminded of that again today when I received a new report from communications guru Thomas Hazlett, Professor of Law & Economics and Director of the Information Economy Project at George Mason University. Hazlett has just penned a devastating critique of the universal service system in which he asks: "What Does $7 Billion Buy?" Answer: not much. Let me just quote from his executive summary here and then encourage you to go read the entire study for more miserable details about this horrendously inefficient government program:

"The 'universal service' regime ostensibly extends local phone service to consumers who could not otherwise afford it. To achieve this goal, some $7 billion annually is raised - - up from less than $4 billion in 1998 - - by taxing telecommunications users. Yet, benefits are largely distributed to shareholders of rural telephone companies, not consumers, and fail -- on net -- to extend network access. Rather, the incentives created by these subsidies encourage widespread inefficiency and block adoption of advanced technologies - - such as wireless, satellite, and Internet-based services - - that could provide superior voice and data links at a fraction of the cost of traditional fixed-line networks. Ironically, subsidy payments are rising even as fixed-line phone subscribership falls, and as the emergence of competitive wireless and broadband networks make traditional universal service concepts obsolete. Unless policies are reformed to reflect current market realities, tax increases will continue to undermine the very goals 'universal service' is said to advance."

And, if you're a real glutton for punishment and want even more grim details about the system, check out this recent report by PFF's "DACA" working group on universal service reform. File all this under: "The Unintended Consequences of Misguided Government Regulation."

From a story in today's USA Today:

"A year ago, a 37-inch flat-panel model typically cost about $4,000. Now, some can be found for as little as $1,100, says television analyst Rosemary Abowd at Pacific Media Associates. From January to May, the most recent data available, average flat-panel prices tumbled more than 12%, she says."

While this is stunning to me, it's not nearly as amazing as the fact that, just a few years ago, most 40+ inch plasmas were going for over $10,000 bucks and couldn't be found in most "big box" electronic retail stores. You had to go to high-end A/V shops to get them. Today, by contrast, when you walk into Best Buy and Circuit City and are surrounded by walls full of flat-panel displays, many of which are dipping below the $2000 price point as the USA Today story suggests.

We've seen the same thing happen with other high-end electronics too, like progressive DVD players and surround sound receivers. I heard the other day that Circuit City is now going to be carrying Denon products, one the best names in the business of consumer electronics and previously only available at very high-end establishments. (I own a killer Denon upscaling DVD player that plays all my surround sound audio discs as well. I love it. Until you've heard Pink Floyd and The Flaming Lips in 5.1 surround, you haven't lived life to the fullest!) Meanwhile, Best Buy now has their "Magnolia" mini-stores within many of their branches that cater to the truly high-end customers. They carry many of the high-end products I use in my home including my incredible Yamaha VX2600 surround sound receiver.

As a result, DVD players and A/V receivers that used to cost a month's salary can now be had for a couple hundred bucks. Just amazing when you think about it. I have a closet full of "retired" consumer electronics gear that is now just gathering dust. It just makes me sick to think what I spent on all that stuff considering that the gear I've got in my living room now cost thousands less and provides a vastly superior audio and video experience.

(No policy angle to all this. I'm just consistently amazed by the wonders of capitalism.)

When is it okay to discriminate? When it improves the performance of the network. That was one of the messages of Carnegie Mellon's Dave Farber, known in some circles as the Grandfather of the Internet, at a session on network neutrality hosted by The Progress & Freedom Foundation Tuesday. The National Press Club event was the public debut of PFF's book on the subject, Net Neutrality or Net Neutering: Should Broadband Internet Services be Regulated? It's edited by PFF's Tom Lenard an the Free State Foundation's Randy May (Randy being a former PFF colleague). I'll direct you to its listing on Amazon, despite that company's position on NN.

I'm consistently amazed with Microsoft's XBOX 360 and XBOX Live Network, and not just because of the games I can play on it but because of everything else I can do.

I was reminded of that tonight when I got on the XBOX Live Marketplace to look for a new "NCAA Football 2007" game demo from EA Sports that I wanted to download and check out before buying the game. When I got to XBOX Live, however, the first thing I was greeted by was a notice about the latest "Artist of the Month." So, I gave that a listen.

Then, my wife came into the room and said something about getting a babysitter sometime soon so we could go see a new movie. But she wasn't sure what she wanted to see, so I pulled up the movie and TV previews page on XBOX Live and downloaded clips from "Superman Returns," XMEN 3," "A Scanner Darkly," and several other movie clips... all in glorious 720p high-def with stunning digital surround sound. (Indeed, downloading all these high-def clips via XBOX encourages me to just wait for home release of the flix because they look much better on my home projector than they do at the theater!)

A short while after that, my kids came into the room so I decided to pull up something for them. I downloaded some clips from Pixar's new movie "Cars" and then also downloaded a free version of the arcade classic "Frogger" for my daughter to try out. Here was a game that I pumped countless quarters into as a kid back in 1981, and now my daughter was sitting with me playing it for free 25 years later. On the sofa in our basement. With a wireless controller. On an 8-foot wide projection screen. My how times change!

Ed Felten-- he of "Freedom to Tinker"-- has a very good technologist's primer on net neutrality and its difficulties. I of course have an affinity for the piece because I think his answer is close to my "maybe." Here is his conclusion:

Readers looking here for a simple policy prescription will be disappointed. The network neutrality issue is more complex and subtle than most of the advocates on either side would have you believe. Net neutrality advocates are right to worry that ISPs can discriminate - and have the means and motive to do so - in ways that might be difficult to stop. Opponents are right to say that enforcing neutrality rules may be difficult and error-prone. Both sides are right to say that making the wrong decision can lead to
unintended side-effects and hamper the Internet's development.
There is a good policy argument in favor of doing nothing and letting the situation develop further.

As if Louisiana doesn't have enough challenges these days, its governor this week vetoed a video franchise reform bill that will drive away broadband investment. Though all of these state-level franchise reform efforts are something of muddled compromises with localities, it defies explanation that a state in rebuilding mode like Louisiana would continue to subject new terrestrial video investment to the shakedown artistry of local video franchising.
The premises for Governor Blanco's veto are thin gruel indeed. First, she claims that the reform would have an uncertain effect on local revenues. Since all these bills keep the needless franchise taxes in place, how would more competitive entry lower tax revenues? To the contrary, by potentially bringing satellite subscribers who laudably avoid these needless taxes back to terrestrial service, the franchise reform would arguably increase local tax take.