DeMint: Public Interest is in Free Markets

by on December 18, 2007 · 8 comments

In a December 13th speech to The Free State Foundation, Senator Jim DeMint quotes Randy May in asking if the FCC should be renamed the “Federal Unbundling Commission.”

DeMint expands on the unbundling theme covering Open Access, A la Carte and Multicast Must Carry, and Net Neutrality.

My favorite quote:

Market regulation is no less than market manipulation, and we need to take that
power away from the government and put it where it belongs, in the hands of
consumers in the free market.

Check out this excellent presentation on the absurdity of the FCC’s telecom and cable agenda at the The Free State Foundation.

If only more members of Congress took this position on telecom issues!

  • Will

    The problem is that it isn’t as clear-cut. A lack of regulation would be wonderful in a market with plenty of competition, but unless you’re in a reasonably sized metropolitan area, it’s quite likely you do not have a choice in ISP. At the very best, your choice will be between a single phone company and a single cable company. Satellite, et al aren’t terribly useful due to latency issues.

    I’m in the middle of nowhere, upstate New York, and I work from home. Because I require a reasonably high-speed connection (read: not dial-up), I have one choice of ISP, the local cable provider. Should that (unnamed) local cable provider decide to start abusing TCP reset packets for their own purposes, violating IETF standards, what choices do I have? If I had the ability to take my business to another provider, either another cable company, this would not be an issue. However, because said cable company is the only player in the local market, I have no choices. Sure, the PR fallout might eventually force them to reconsider, but in the meantime, I’m stuck, and additionally, long-term I’m stuck with them whether they deserve to receive my money or not.

    It’s this type of situation that must be addressed, and it’s what network neutrality should be about. Granted campaigners for it have taken it to major and unfortunate extremes, doesn’t mean it isn’t a problem that needs to be addressed. In a free market, it wouldn’t be an issue because there would be plenty of competition, and I could easily take my business elsewhere. Unfortunately, that’s not what we have. The market has been manipulated into its current position, and there’s no easy way out.

  • Will

    The problem is that it isn’t as clear-cut. A lack of regulation would be wonderful in a market with plenty of competition, but unless you’re in a reasonably sized metropolitan area, it’s quite likely you do not have a choice in ISP. At the very best, your choice will be between a single phone company and a single cable company. Satellite, et al aren’t terribly useful due to latency issues.

    I’m in the middle of nowhere, upstate New York, and I work from home. Because I require a reasonably high-speed connection (read: not dial-up), I have one choice of ISP, the local cable provider. Should that (unnamed) local cable provider decide to start abusing TCP reset packets for their own purposes, violating IETF standards, what choices do I have? If I had the ability to take my business to another provider, either another cable company, this would not be an issue. However, because said cable company is the only player in the local market, I have no choices. Sure, the PR fallout might eventually force them to reconsider, but in the meantime, I’m stuck, and additionally, long-term I’m stuck with them whether they deserve to receive my money or not.

    It’s this type of situation that must be addressed, and it’s what network neutrality should be about. Granted campaigners for it have taken it to major and unfortunate extremes, doesn’t mean it isn’t a problem that needs to be addressed. In a free market, it wouldn’t be an issue because there would be plenty of competition, and I could easily take my business elsewhere. Unfortunately, that’s not what we have. The market has been manipulated into its current position, and there’s no easy way out.

  • http://cordblomquist.com Cord Blomquist

    Will, I agree that competition is not what it could be, but then why don’t we throw our lobbying dollars behind rolling back regulation? Of course few people in the telecom or internet content industries want across the board deregulation because so many have an interest in specific regulations. Sure, they may want to see some regulations gone, but others hurt their competition or otherwise send dollars their way.

    I’d like to see a real grass-roots coalition, unlike the corporate lobbying front that is Save the Internet, take on the FCC on behalf of consumers. We could have nation-wide Wi-Max service now and you could get a new way to access the net within months should Wi-Max be made available.

    Just think of the possibilities had the FCC not been around since the 30s stymieing innovation! The telcom industry would be very different, but also likely much better and furiously competitive.

    So, while I agree with you about competition being hurt by the mess of regulations we have now, I certainly don’t believe that more regulation is the cure.

  • http://cordblomquist.com Cord Blomquist

    Will, I agree that competition is not what it could be, but then why don’t we throw our lobbying dollars behind rolling back regulation? Of course few people in the telecom or internet content industries want across the board deregulation because so many have an interest in specific regulations. Sure, they may want to see some regulations gone, but others hurt their competition or otherwise send dollars their way.

    I’d like to see a real grass-roots coalition, unlike the corporate lobbying front that is Save the Internet, take on the FCC on behalf of consumers. We could have nation-wide Wi-Max service now and you could get a new way to access the net within months should Wi-Max be made available.

    Just think of the possibilities had the FCC not been around since the 30s stymieing innovation! The telcom industry would be very different, but also likely much better and furiously competitive.

    So, while I agree with you about competition being hurt by the mess of regulations we have now, I certainly don’t believe that more regulation is the cure.

  • http://pragmaticgeographer.blogspot.com/ Ben R.

    Just think of the possibilities had the FCC not been around since the 30s stymieing innovation! The telcom industry would be very different, but also likely much better and furiously competitive.

    Why? It was my understanding that until pretty recently telecommunications basically amounted to a natural monopoly due to barriers to entry (similar to water/power distribution – there are only so many optimum network paths and recreating them is terribly inefficient). Would we not just have a giant nationwide, unregulated telecommunications giant (or nearly equally inefficient local monopolies) in the absence of regulation?

    We have that now in terms of cable, but I would attribute that to the shortsighted removal of common-carrier regulations – recall how many ISPs you had a choice of during the days of dial up and how competitive their pricing was.

  • http://pragmaticgeographer.blogspot.com/ Ben R.

    Just think of the possibilities had the FCC not been around since the 30s stymieing innovation! The telcom industry would be very different, but also likely much better and furiously competitive.

    Why? It was my understanding that until pretty recently telecommunications basically amounted to a natural monopoly due to barriers to entry (similar to water/power distribution – there are only so many optimum network paths and recreating them is terribly inefficient). Would we not just have a giant nationwide, unregulated telecommunications giant (or nearly equally inefficient local monopolies) in the absence of regulation?

    We have that now in terms of cable, but I would attribute that to the shortsighted removal of common-carrier regulations – recall how many ISPs you had a choice of during the days of dial up and how competitive their pricing was.

  • http://cordblomquist.com Cord Blomquist

    Natural monopoly eh? It’s hard to call network monopolies natural when they’re codified into law everywhere they exist. Telecoms and cable companies had/have monopolies not because of some law of economic nature, but rather because local and state government create them. The thought persists that having too many companies digging up the city and laying cable is inefficient–just the think that lead to government-sponsored monopolies.

    Extending that thinking to other industries would mean that having more than one car company is also inefficient–another example of wasteful competition. We should have a car planning bureau just like our telecom planning bureau! Then we’d have a car just as good as the Yugo or the Trabant!

    Seriously though, real competition brings about great advances in all industries, telecom is not an exception.

  • http://cordblomquist.com Cord Blomquist

    Natural monopoly eh? It’s hard to call network monopolies natural when they’re codified into law everywhere they exist. Telecoms and cable companies had/have monopolies not because of some law of economic nature, but rather because local and state government create them. The thought persists that having too many companies digging up the city and laying cable is inefficient–just the think that lead to government-sponsored monopolies.

    Extending that thinking to other industries would mean that having more than one car company is also inefficient–another example of wasteful competition. We should have a car planning bureau just like our telecom planning bureau! Then we’d have a car just as good as the Yugo or the Trabant!

    Seriously though, real competition brings about great advances in all industries, telecom is not an exception.

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