Technology is altering the way we do business in a host of markets, in large part because of new capabailities for acquiring and managing information. While this does create efficienices, many remain leery due to the incursions on privacy this entails. Car insurance provides a recent example. Progressive Insurance has created a pilot program for TripSense, which uses a device that plugs into a car’s onboard diagnostic port to track driver behavior.
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While running television ads in Washington, D.C. to show what a swell bunch of people they are, the National Association of Broadcasters have been running an aggressive campaign to squeeze out the latest threat to local broadcasters, satellite radio providers XM and Sirius. The problem, it seems, is that XM has been offering its subscribers useful information about local traffic and weather conditions. The local broadcasters view this as a major transgression, and have cried foul to the FCC. Because of previous regulatory barriers inspired by local broadcasters, XM Radio is restricted to national programming. XM’s solution is to provide local forecasts on a national basis. While it may be inefficient to provide listeners in L.A. up-to-date information on traffic jams in Manhattan, it’s the only way around the existing rules. Local broadcasters have petitioned the FCC and have also played the homeland security card in an effort to keep satellite providers out of local markets. Scott Woolley provides a full account at Forbes.com.
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Last Friday the FCC quietly released the interim rule on unbundling and UNE-P pricing, claiming that if they failed to act, the $127 billion local telecommunications market would be placed at risk. Yet it’s not clear how the interim rule calms this market. The rule extends the current UNE-P price freeze for six months, which is longer than the local phone companies would like (they had agreed to freeze rates through the end of the year). It also provides for an additional six-month transition period, should a final rule not be ready. USTA and two local phone companies have already asked the court to intervene and force the FCC to comply with previous decisions. They are requesting permanent rules from the FCC by the end of the year. It seems this latest effort does little to resolve the uncertainties surrounding this market. On a positive note, the FCC does reiterate support for facilities-based competition, a goal that will be pursued in the final rule (whenever that happens).
That’s the tally for commissioners on the Antitrust Modernization Commission (AMC). With a vague charter to “examine whether the need exists to modernize the antitrust laws and to identify and study related issues,” the AMC has been tasked with preparing a report for Congress and the president. The twelve commissioners are appointed by the president and Congress for purposes of political balance and the report is to be delivered within three years of the first meeting, which was last month. Deborah Garza has been appointed chair of the commission.
One potential area of interest is the impact of technology on markets and antitrust policy. Network industries and technological change may generate calls for new definitions of markets and competition, particularly in the wake of the Microsoft case and current debate over the merger between Oracle and PeopleSoft. Economists have long been wary of antitrust laws, identifying potential harmful effects that such policies can have in the marketplace. Efficient practices and mergers have been disallowed in the past on antitrust grounds, and in many instances these cases are filed by competitors who are threatened rather than consumers who are harmed. Let’s hope these lessons are not lost in the current debate over modernization.
Recently, the AMC issued a request for public comment, asking interested parties to identify areas that the commission should include in its review. Comments are due September 30.