This week I appeared on C-SPAN's weekly program "The Communicators" and discussed a wide variety of communications and media policy issues including: the outlook for telecom & media legislation in the new Democratic Congress, the First Amendment treatment of new media technologies, Net neutrality regulation and the need for universal service and spectrum policy reform.

The video can be viewed here and I apologize in advance if I put you to sleep!

The rentseeking by regulators that's as old as time -- taxes. George Pieler of the Institute for Policy Innovation has a must-read on CNET today about the long shadow of yesterday's telecom tax regime and how it's darkening the future of innovation.

Tom Lenard and I are very excited that the FCC has begun and inquiry into reverse auctions as a means to distribute universal service. Though it is very far from being realized, just asking the question is a bold step in the face of the political economy realities of the universal service system. In addition, the questions of auction design and rules are very delicate and subtle. Despite all the political and practical hurdles, this is a worthy discussion to be having as we ponder how to get rural America high quality, low cost, advanced communications systems.

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."

Last month, I posed several threshold questions by which policymakers can clarify the ends and means of social regulation in communications. In doing so, however, I provided little guidance regarding which ends were appropriate. I asked only that, as policymakers clarify these ends, they look at all the goals of social regulation in conjunction with economic regulatory goals.

My failure to say more at that time about what social goals are appropriate stemmed, in part, from the unfortunate truth that deciding which non-economic goals are appropriate for communications regulation is ultimately a subjective exercise. As in past and current attempts at communications reform, these subjective judgments tend to result in social obligations spilling forth as "laundry lists" to which everyone involved contributes their pet obligations, with no obvious limitation on what obligations will be imposed next.

Nevertheless, my contention that policymakers should set forth the goals of communications regulation comprehensively and with specificity does provide some guidance on how to make these judgment calls. In particular, policymakers should resist pursuing social goals that they cannot (or will not) reduce to discrete and measurable requirements.

The W$J's article today on the demands local governments have made before allowing Verizon into the local video market lay bare the fact that franchising isn't about management of rights-of-way, or recompense for use of public property, but about taxation and in-kind goodies that localitiies can coax from would-be entrants.

The Journal sets out the buffet of demands localities are making:

"The road to Hell is paved with good intentions." This 16th Century proverb (apparently not attributable to one of Ray's favorites, Samuel Johnson), if applied to the federal e-rate program through a filter of Dante's Inferno, would suggest that we're embedded in Hell's 8th Circle.

The House Commerce Committee's Subcommittee on Oversight and Investigations this week released a much-anticipated report on the rampant fraud and abuse found in the e-rate program. Heather Weaver of RCR Wireless News has a good piece on it, with a priceless quote of Barton from earlier this year: "I have been in Congress 21 years, and I haven't seen a more mismanaged program. If I had to vote today, I would vote to abolish it-period. If I can change it, I will. If I have the votes to kill it, I will. If I can't do either of those things, then I will so underfund it that it ceases to exist." Um, I take it you don't care for the program?

Recent efforts to expand universal service subsidies and to tack public safety provisions onto Senate DTV proposals [TRDaily subscriptions required] underscore policymakers' continued interest in regulating communications companies to achieve social objectives. As I stated in assessing last month's telecom reform draft, government imposition of such "social" obligations may be both understandable and unavoidable, especially where there is evidence of true "market failure."

Yet to the extent participants in the reform debate see the need for social regulation at all, they generally fail to specify a coherent framework for deciding whether and how government should intervene on these issues. Proposals for social regulation emerge, instead, as "laundry lists" held together by naked (or tacit) political judgments. By leaving the objectives and interrelationships of social regulation inchoate, legislators make the reform process needlessly uncertain, while sacrificing the benefit of focused input on these issues by academics and other technical experts.

To ameliorate this situation, policymakers should ask themselves some threshold questions about what social regulation should accomplish and how these goals can be achieved most effectively given other objectives.

Not unlike Ray's comment on the FCC's recent Wireline Broadband Order, the draft communications reform bill just released by the House Commerce Committee includes elements of promise and peril. On the one hand, the draft (and the ensuing discussion) offers another chance to consider how to promote broadband by limiting regulation of these competitive services primarily to so-called "social" obligations. On the other hand, the bill highlights the risk policymakers will fail to consider where regulation may not be needed at all, especially with respect to social goals.

EBay's decision to acquire Skype highlights (again) the evaporation of market boundaries between historically distinct services, as well as the need for pioneering companies to exercise caution in crossing such boundaries.