Reed Hundt versus Michael Powell–Observations

On June 10 at the National Press Club, the Federalist Society for Law and Public Policy organized a forum on technology policy in the Presidential campaigns, featuring former FCC Chair Reed Hundt, tech advisor to Senator Barrack Obama and former FCC Chair Michael Powell, advisor to Senator John McCain. One sees in U.S. elections such a fascination with the personal qualities of the candidates that one would think that the President ran the executive branch single-handed. But, of course, he doesn’t, and the teams matter. A relatively inexerperienced candidate might make up for this by having a knack for identifying astute advisors–or find his platform hijacked by a careerist with his own agenda.

Reed Hundt opened with an attack on Sen. McCain, including such details as McCain’s vote against the e-rate, the provision of the 1996 Telecom Act that funded Internet service to schools and libraries. This sally might have given him greater leverage had the room not been filled with tech-savvy types aware of the program’s difficulties–and the failure of the computerized classroom to produce any educational miracles. Then he offered an outline of an Obama administration’s tech policy.

-A promise to have the government “nimbly” spend $150 billion on technology (citing the fall of the U.S. from 4th place to 15th in broadband–a gloomy statistic that disappears when one checks actual broadband speed as opposed to advertised speed).

-tax credits for green energy.

-move the national to getting 25% of its energy from green sources such as solar.

-blocking further mergers until policies supporting localism and diversity are strengthened.

Powell immediately dove into substance with his courteous and learned style, emphasizing Sen. McCain’s experience and his ability to have observed what was working and what was not in regulation, culminating in a preference for creating a climate hospitable to entrepreneurship. He emphasized that the U.S. continues to lead the world in innovation and the creation of wealth. His outline of McCain’s policies featured:

-A commitment to maintaining access to capital and investment, including attention to tax rates and capital gains. (Here Powell noted the consequences of high corporate tax rates included driving capital overseas, such that U.S. labor would end up bearing the cost–U.S. corporate taxes already being the highest in the world).

-Immigration policy, including reform of the H1-B visa program to improve availability of qualified tech workers.

-Light regulation-particularly on the issue of net neutrality, where Powell emphasized the difficulty in defining discrimination against bits and the odds of getting policy wrong in the absence of any concrete dispute.

At one time, Senator McCain had been interested in cable a la carte pricing and forced unbundling of cable channels, but he seems to left that behind for a tack more consistent with his overall policy of light regulation and attention to continued investment.

During question period, however, some of Hundt’s spontaneous utterances raised the eyebrows of even jaded observers such as myself. For example, he noted Senator Obama’s excitement about current plans to build cities in China that measure and plan for efficient energy use… A nifty idea, but in the United States there are already any number of cities, pretty well built up. We are to rebuild them? Maybe this needs to be thought through a little more.

Hundt focussed relentlessly on McCain’s attitude to mergers. Powell noted that blocking mergers is not really the function of the legislative branch. As Hundt refused to turn his attention from the matter and went on and on about mergers and consolidation, one was left with the impression that he thought we were living in an age of monopoly, pre-Fox, pre-C-SPAN, pre-200 channels, pre-BBC, pre-wireless, pre-blogosphere. This negativity about the overall direction of the Information Age was a little surreal. Even if mergers were a dominant feature of today’s diversified landscape, mergers are, after all, one way among many that firms grow; by and large, growth is not bad, and consolidation has brought considerable benefits for consumers. Nationwide consolidation in the wireless business, for example, created efficiencies that lead to significant drops in prices.

But the discussion quickly became even stranger. An audience member asked Hundt to provide an example of an issue on which he felt that the media had acted as a bottleneck and kept information from reaching the American public. Hundt explained that he believed that the Bush administration and the media had acted in concert and “coordinated” coverage to deceive the American people about the need for war in Iraq. Net neutrality, he explained, was necessary to keep information channels open. This view of government as guarantor of free speech, given he has just depicted the government as a villain determined to distort speech, is a little odd. Indeed, the history of the Fairness doctrine suggests that regulation to maintain “objectivity” (similar to “neutrality”) is more likely to be used by government to harass media outlets critical of government policies than to keep any channels open (as media history buffs will recall the Kennedy and Nixon administrations used the Fairness Doctrine). The view of the media as in league with the Bush administration is even more eccentric. One can imagine sales-hungry editors independently urging coverage to slant one way or another, but “coordination” is a stretch in the absence of fairly specific evidence.

Last but not least came an enthusiastic Reed’s reference to Schumpeterian competition, by which he seemed to mean … competition between networks ginned up and managed by regulation. In other words… *not* Schumpeterian competition. Ah.

This will be an interesting campaign, however it shakes out.

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