Over at Discourse magazine I’ve posted my latest essay on how conservatives are increasingly flirting with the idea of greatly expanding regulatory control of private speech platforms via some sort of common carriage regulation or new Fairness Doctrine for the internet. It begins:

Conservatives have traditionally viewed the administrative state with suspicion and worried about their values and policy prescriptions getting a fair shake within regulatory bureaucracies. This makes their newfound embrace of common carriage regulation and media access theory (i.e., the notion that government should act to force access to private media platforms because they provide an essential public service) somewhat confusing. Recent opinions from Supreme Court Justice Clarence Thomas as well as various comments and proposals of Sen. Josh Hawley and former President Trump signal a remarkable openness to greater administrative control of private speech platforms. Given the takedown actions some large tech companies have employed recently against some conservative leaders and viewpoints, the frustration of many on the right is understandable. But why would conservatives think they are going to get a better shake from state-regulated monopolists than they would from today’s constellation of players or, more importantly, from a future market with other players and platforms?

I continue on to explain why conservatives should be skeptical of the administrative state being their friend when it comes to the control of free speech. I end by reminding conservatives what President Ronald Reagan said in his 1987 veto of legislation to reestablish the Fairness Doctrine: “History has shown that the dangers of an overly timid or biased press cannot be averted through bureaucratic regulation, but only through the freedom and competition that the First Amendment sought to guarantee.”

Read more at Discourse, and down below you will find several other recent essays I’ve written on the topic.

• “FCC’s O’Rielly on First Amendment & Fairness Doctrine Dangers“
• “A Good Time to Re-Read Reagan’s Fairness Doctrine Veto“
• “Sen. Hawley’s Radical, Paternalistic Plan to Remake the Internet“
• “How Conservatives Came to Favor the Fairness Doctrine & Net Neutrality“
• “Sen. Hawley’s Moral Panic Over Social Media“
• “The White House Social Media Summit and the Return of ‘Regulation by Raised Eyebrow’“
• “The Not-So-SMART Act“
• “The Surprising Ideological Origins of Trump’s Communications Collectivism“

If there are two general principles that unify my recent work on technology policy and innovation issues, they would be as follows. To the maximum extent possible:

1. We should avoid preemptive and precautionary-based regulatory regimes for new innovation. Instead, our policy default should be innovation allowed (or “permissionless innovation”) and innovators should be considered “innocent until proven guilty” (unless, that is, a thorough benefit-cost analysis has been conducted that documents the clear need for immediate preemptive restraints).
2. We should avoid rigid, “top-down” technology-specific or sector-specific regulatory regimes and/or regulatory agencies and instead opt for a broader array of more flexible, “bottom-up” solutions (education, empowerment, social norms, self-regulation, public pressure, etc.) as well as reliance on existing legal systems and standards (torts, product liability, contracts, property rights, etc.).

I was very interested, therefore, to come across two new essays that make opposing arguments and proposals. The first is this recent Slate oped by John Frank Weaver, “We Need to Pass Legislation on Artificial Intelligence Early and Often.” The second is Ryan Calo’s new Brookings Institution white paper, “The Case for a Federal Robotics Commission.”

Weaver argues that new robot technology “is going to develop fast, almost certainly faster than we can legislate it. That’s why we need to get ahead of it now.” In order to preemptively address concerns about new technologies such as driverless cars or commercial drones, “we need to legislate early and often,” Weaver says. Stated differently, Weaver is proposing “precautionary principle”-based regulation of these technologies. The precautionary principle generally refers to the belief that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harms to individuals, groups, specific entities, cultural norms, or various existing laws, norms, or traditions.

Calo argues that we need “the establishment of a new federal agency to deal with the novel experiences and harms robotics enables” since there exists “distinct but related challenges that would benefit from being examined and treated together.” These issues, he says, “require special expertise to understand and may require investment and coordination to thrive.

I’ll address both Weaver and Calo’s proposals in turn.

Problems with Precautionary Regulation

Let’s begin with Weaver proposed approach to regulating robotics and autonomous systems.

What Weaver seems to ignore—and which I discuss at greater length in my latest book—is that “precautionary” policy-making typically results in technological stasis and lost opportunities for economic and social progress. As I noted in my book, if we spend all our time living in constant fear of worst-case scenarios—and premising public policy upon such fears—it means that best-case scenarios will never come about. Wisdom and progress are born from experience, including experiences that involve risk and the possibility of occasional mistakes and failures. As the old adage goes, “nothing ventured, nothing gained.”

More concretely, the problem with “permissioning” innovation is that traditional regulatory policies and systems tend to be overly-rigid, bureaucratic, costly, and slow to adapt to new realities. Precautionary-based policies and regulatory systems focus on preemptive remedies that aim to predict the future, and future hypothetical problems that may not ever come about. As a result, preemptive bans or highly restrictive regulatory prescriptions can limit innovations that yield new and better ways of doing things.

Weaver doesn’t bother addressing these issues. He instead advocates regulating “early and often” without stopping to think through the potential costs of doing so. Yet, all regulation has trade-offs and opportunity costs. Before we rush to adopt rules based on knee-jerk negative reactions to new technology, we should conduct comprehensive benefit-cost analysis of the proposals and think carefully about what alternative approaches exist to address whatever problems we have identified.

Incidentally, Weaver also does not acknowledge the contradiction inherent in his thinking when he says robotic technology “is going to develop fast, almost certainly faster than we can legislate it. That’s why we need to get ahead of it now.” Well, if robotic technology is truly developing “faster than we can legislate it,” then “getting out ahead of it” would be seemingly impossible! Unless, that is, he envisions regulating robotic technologies so stringently as to effectively bring new innovation to a grinding halt (or banning altogether).

To be clear, my criticisms should not be read to suggest that zero regulation is the best option. There are plenty of thorny issues that deserve serious policy consideration and perhaps even some preemptive rules. But how potential harms are addressed matters deeply. We should exhaust all other potential nonregulatory remedies first — education, empowerment, transparency, etc. — before resorting to preemptive controls on new forms of innovation. In other words, ex post (or after the fact) solutions should generally trump ex ante (preemptive) controls.

I’ll say more on this point in the conclusion since my response addresses general failings in Ryan Calo’s Federal Robotics Commission proposal, to which we now turn.

Problems with a Federal Robotics Commission

Moving on to Calo, it is important to clarify what he is proposing because he is careful not to overstate his case in favor of a new agency for robotics. He elaborates as follows:

“The institution I have in mind would not “regulate” robotics in the sense of fashioning rules regarding their use, at least not in any initial incarnation. Rather, the agency would advise on issues at all levels—state and federal, domestic and foreign, civil and criminal—that touch upon the unique aspects of robotics and artificial intelligence and the novel human experiences these technologies generate. The alternative, I fear, is that we will continue to address robotics policy questions piecemeal, perhaps indefinitely, with increasingly poor outcomes and slow accrual of knowledge. Meanwhile, other nations that are investing more heavily in robotics and, specifically, in developing a legal and policy infrastructure for emerging technology, will leapfrog the U.S. in innovation for the first time since the creation of steam power.”

Here are some of my concerns with Calo’s proposed Federal Robotics Commission.

Will It Really Just Be an Advisory Body?

First, Calo claims he doesn’t want a formal regulatory agency, but something more akin to a super-advisory body. He does, however, sneak in that disclaimer that he doesn’t envision it to be regulatory “at least not in any initial incarnation.” Perhaps, then, he is suggesting that more formal regulatory controls would be in the cards down the road. It remains unclear.

Regardless, I think it is a bit disingenuous to propose the formation of a new governmental body like this and pretend that it will not someday very soon come to possess sweeping regulatory powers over these technologies. Now, you may well feel that that is a good thing. But I fear that Calo is playing a bit of game here by asking the reader to imagine his new creation would merely stick to an advisory role.

Regulatory creep is real. There just aren’t too many examples of agencies being created solely for their advisory expertise and then not also getting into the business of regulating the technology or topic that is included in that agency’s name. And in light of some of Calo’s past writing and advocacy, I can’t help but think he is actually hoping that the agency comes to take on a greater regulatory role over time. Regardless, I think we can bank on that happening and I that there are reasons to worry about it for reasons noted above and which I will elaborate on below.

Incidentally, if Calo is really more interested in furthering just this expert advisory capacity, there are plenty of other entities (including non-governmental bodies) that could play that role. How about the National Science Foundation, for example? Or how about a multi-stakeholder body consisting of many different experts and institutions? I could go on, but you get the point. A single point of action is also a single point of failure. I don’t want just one big robotics bureaucracy making policy or even advising. I’d prefer a more decentralized approach, and one that doesn’t carry a (potential) big regulatory club in its hand.

Public Choice / Regulatory Capture Problems

Second, Calo underestimates the public choice problems of creating a sector-specific or technology-specific agency just for robotics. To his credit, he does admit that, “agencies have their problems, of course. They can be inefficient and are subject to capture by those they regulate or other special interests.” He also notes he has criticized other agencies for various failings. But he does not say anything more on this point.

Let’s be clear. There exists a long and lamentable history of sector-specific regulators being “captured” by the entities they regulate. To read the ugly reality, see my compendium, “Regulatory Capture: What the Experts Have Found.” That piece documents what leading academics of all political stripes have had to say about this problem over the past century. No one ever summarized the nature and gravity of this problem better than the great Alfred Kahn in his masterpiece, The Economics of Regulation: Principles and Institutions (1971):

“When a commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates, to assure a desirable performance by relying on those monopolistic chosen instruments and its own controls rather than on the unplanned and unplannable forces of competition. [. . . ] Responsible for the continued provision and improvement of service, [the regulatory commission] comes increasingly and understandably to identify the interest of the public with that of the existing companies on whom it must rely to deliver goods.” (pgs. 12, 46)

The history of the Federal Communications Commission (FCC) is highly instructive in this regard and was documented in a 66-page law review article I penned with Brent Skorup entitled, “A History of Cronyism and Capture in the Information Technology Sector,” (Journal of Technology Law & Policy, Vol. 18, 2013). Again, it doesn’t make for pleasant reading. Time and time again, instead of serving the “public interest,” the FCC served private interests. The entire history of video marketplace regulation is one of the most sickening examples to consider since there have almost eight decades worth of case studies of the broadcast industry using regulation as a club to beat back new entry, competition, and innovation. [Skorup and I have another paper discussing that specific history and how to go about reversing it.] This history is important because, in the early days of the Commission, many proponents thought the FCC would be exactly the sort of “expert” independent agency that Calo envisions his Federal Robotics Commission would be. Needless to say, things did not turn out so well.

But the FCC isn’t the only guilty offender in this regard. Go read the history about how airlines so effectively cartelized their industry following World War II with the help of the Civil Aeronautics Board. Thankfully, President Jimmy Carter appointed Alfred Kahn to clean things up in the 1970s. Kahn, a life-long Democrat, came to realize that the problem of capture was so insidious and inescapable that abolition of the agency was the only realistic solution to make sure consumer welfare would improve. As a result, he and various other Democrats in the Carter Administration and in Congress worked together to sunset the agency and its hideously protectionist, anti-consumer policies. (Also, please read this amazing 1973 law review article on “Economic Regulation vs. Competition,” by Mark Green and Ralph Nader if you need even more proof of why this is a such a problem.)

In other words, the problem of regulatory capture is not something one can casually dismiss. The problem is still very real and deserves more consideration before we casually propose creating new agencies, even “advisory” agencies. At a minimum, when proposing new agencies, you need to get serious about what sort of institutional constraints you might consider putting in place to make sure that history does not repeat itself. Because if you don’t, various large, well-heeled, and politically-connected robotics companies could come to capture any new “Federal Robotics Commission” in very short order.

Can We Clean Up Old Messes Before Building More Bureaucracies?

Third, speaking of agencies, if it is the case that the alphabet soup collection of regulatory agencies we already have in place are not capable of handling “robotics policy” right now, can we talk about reforming them (or perhaps even getting rid of a few of them) first? Why must we just pile yet another sector-specific or technology-specific regulator on top of the many that already exist? That’s just a recipe for more red tape and potential regulatory capture. Unless you believe there is value in creating bureaucracy for the sake of creating bureaucracy, there is no excuse for not phasing out agencies that failed in their original mission, or whose mission is now obsolete, for whatever reason. This is a fundamental “good government” issue that politicians and academics of all stripes should agree on.

Calo indirectly addresses this point by noting that “we have agencies devoted to technologies already and it would be odd and anomalous to think we are done creating them.” Curiously, however, he spends no time talking about those agencies or asking whether they have done a good job. Again, the heart of Calo’s argument comes down the assertion that another specialized, technology-specific “expert” agency is needed because there are “novel” issues associated with robotics. Well, if it is true, as Calo suggests, that we have been down this path before (and we have), and if you believe our economy or society has been made better off for it, then you need to prove it. Because the objection to creating another regulatory bureaucracy is not simply based on distaste for Big Government; it comes down to the simple questions: (1) Do these things work; and (2) Is there a better alternative?

This is where Calo’s proposal falls short. There is no effort to prove that technocratic or “scientific” bureaucracies, on net, are worth their expense (to taxpayers) or cost (to society, innovation, etc.) when compared to alternatives. Of course, I suspect this is where Calo and I might part ways regarding what metrics we would use to gauge success. I’ll save that discussion for another day and shift to what I regard as the far more serious deficiency of Calo’s proposal.

Do We Become Global Innovation Leaders Through Bureaucratic Direction?

Fourth, and most importantly, Calo does not offer any evidence to prove his contention that we need a sector-specific or technology-specific agency for robotics in order to develop or maintain America’s competitive edge in this field. Moreover, he does not acknowledge how his proposal might have the exact opposite result. Let me spend some time on this point because this is what I find most problematic about his proposal.

In his latest Brookings essay and his earlier writing about robotics, Calo keeps suggesting that we need a specialized federal agency for robotics to avoid “poor outcomes” due to the lack of “a legal and policy infrastructure for emerging technology.” He even warns us that other countries who are looking into robotics policy and regulation more seriously “will leapfrog the U.S. in innovation for the first time since the creation of steam power.”

Well, on that point, I must ask: Did America need a Federal Steam Agency to become a leader in that field? Because unless I missed something in history class, steam power developed fairly rapidly in this country without any centralized bureaucratic direction. Or how about a more recent example: Did America need a Federal Computer Commission or Federal Internet Commission to obtain or maintain a global edge in computing, the Internet, or the Digital Economy?

To the contrary, we took the EXACT OPPOSITE approach. It’s not just that no new agencies were formed to guide the development of computing or the Internet in this country. It’s that our government made a clear policy choice to break with the past by rejecting top-down, command-and-control regulation by unelected bureaucrats in some shadowy Beltway agency.

Incidentally, it was Democrats who accomplished this. While many Republicans today love to crack wise-ass comments about Al Gore and the Internet while simultaneously imagining themselves to be the great defenders of Internet freedom, the reality is that we have the Clinton Administration and one its most liberal members—Ira Magaziner—to thank for the most blessedly “light-touch,” market-oriented innovation policy that the world has ever seen.

What did Magaziner and the Clinton Administration do? They crafted the amazing 1997 Framework for Global Electronic Commerce, a statement of the Administration’s principles and policy objectives toward the Internet and the emerging digital economy. It recommended reliance upon civil society, contractual negotiations, voluntary agreements, and ongoing marketplace experiments to solve information age problems. First, “the private sector should lead. The Internet should develop as a market driven arena not a regulated industry,” the Framework recommended. “Even where collective action is necessary, governments should encourage industry self-regulation and private sector leadership where possible.” Second, “governments should avoid undue restrictions on electronic commerce” and “parties should be able to enter into legitimate agreements to buy and sell products and services across the Internet with minimal government involvement or intervention.”

I’ve argued elsewhere that the Clinton Administration’s Framework, “remains the most succinct articulation of a pro-freedom, innovation-oriented vision for cyberspace ever penned.” Of course, this followed the Administration’s earlier move to allow the full commercialization of the Internet, which was even more important. The policy disposition they established with these decisions resulted in an unambiguous green light for a rising generation of creative minds who were eager to explore this new frontier for commerce and communications. And to reiterate,they did it without any new bureaucracy.

If You Regulate “Robotics,” You End Up Regulating Computing & Networking

Incidentally, I do not see how we could create a new Federal Robotics Commission without it also becoming a de facto Federal Computing Commission. Robotics and the many technologies and industries it already includes — driverless cars, commercial drones, Internet of Things, etc. — is becoming a hot policy topic, and proposals for regulation are already flying. These robotic technologies are developing on top of the building blocks of the Information Revolution: microprocessors, wireless networks, sensors, “big data,” etc.

Thus, I share Cory Doctorow’s skepticism about how one could logically separate “robotics” from these other technologies and sectors for regulatory purposes:

I am skeptical that “robot law” can be effectively separated from software law in general. … For the life of me, I can’t figure out a legal principle that would apply to the robot that wouldn’t be useful for the computer (and vice versa).

In his Brookings paper, Calo responded to Doctorow’s concern as follows:

the difference between a computer and a robot has largely to do with the latter’s embodiment. Robots do not just sense, process, and relay data. Robots are organized to act upon the world physically, or at least directly. This turns out to have strong repercussions at law, and to pose unique challenges to law and to legal institutions that computers and the Internet did not.

I find this fairly unconvincing. Just because robotic technologies have a physical embodiment does not mean their impact on society is all that more profound than computing, the Internet, and digital technologies. Consider all the hand-wringing going on today in cybersecurity circles about how hacking, malware, or various other types of digital attacks could take down entire systems or economies. I’m not saying I buy all that “technopanic” talk (and here are about three dozens of my essays arguing the contrary), but the theoretical ramifications are nonetheless on par with dystopian scenarios about robotics.

The Alternative Approach

Of course, it certainly may be the case that some worst-case scenarios are worth worrying about in both cases—for robotics and computing, that is. Still, is a Federal Robotics Commission or a Federal Computing Commission really the sensible way to address those issues?

To the contrary, this is why we have a Legislative Branch! So many of the problems of our modern era of dysfunctional government are rooted in an unwise delegation of authority to administrative agencies. Far too often, congressional lawmakers delegate broad, ambiguous authority to agencies instead of facing up to the hard issues themselves. This results in waste, bloat, inefficiencies, and an endless passing of the buck.

There may very well be some serious issues raised by robotics and AI that we cannot ignore, and which may even require a little preemptive, precautionary policy. And the same goes for general computing and the Internet. But that is not a good reason to just create new bureaucracies in the hope that some set of mythical technocratic philosopher kings will ride in to save the day with their supposed greater “expertise” about these matters. Either you believe in democracy or you don’t. Running around calling for agencies and unelected bureaucrats to make all the hard choices means that “the people” have even less of a say in these matters.

Moreover, there are many other methods of dealing with robotics and the potential problems robotics might create than through the creation of new bureaucracy. The common law already handles many of the problems that both Calo and Weaver are worried about. To the extent robotic systems are involved in accidents that harm individuals or their property, product liability law will kick in.

On this point, I strongly recommend another new Brookings publication. John Villasenor’s outstanding April white paper, “Products Liability and Driverless Cars: Issues and Guiding Principles for Legislation,” correctly argues that,

“when confronted with new, often complex, questions involving products liability, courts have generally gotten things right. … Products liability law has been highly adaptive to the many new technologies that have emerged in recent decades, and it will be quite capable of adapting to emerging autonomous vehicle technologies as the need arises.”

Thus, instead of trying to micro-manage the development of robotic technologies in an attempt to plan for every hypothetical risk scenario, policymakers should be patient while the common law evolves and liability norms adjust. Traditionally, the common law has dealt with products liability and accident compensation in an evolutionary way through a variety of mechanisms, including strict liability, negligence, design defects law, failure to warn, breach of warranty, and so on. There is no reason to think the common law will not adapt to new technological realities, including robotic technologies. (I address these and other “bottom-up” solutions in my new book.)

In the meantime, let’s exercise some humility and restraint here and avoid heavy-handed precautionary regulatory regimes or the creation of new technocratic bureaucracies. And let’s not forget that many solutions to the problems created by new robotic technologies will develop spontaneously and organically over time as individuals and institutions learn to cope and “muddle through,” as they have many times before.

Additional Reading

• Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom (2014)
• Muddling Through: How We Learn to Cope with Technological Change, June 30, 2014
• New Paper: “Removing Roadblocks to Intelligent Vehicles and Driverless Cars,” September 17, 2014
• Slide Presentation: Policy Issues Surrounding the Internet of Things & Wearable Technology, September 12, 2014
• [Video] Cap Hill Briefing on Emerging Tech Policy Issues (June 2014)
• The Growing Conflict of Visions over the Internet of Things & Privacy, January 14, 2012
• Can We Adapt to the Internet of Things? IAPP Privacy Perspectives, June 19, 2013
• My Filing to the FTC in its ‘Internet of Things’ Proceeding, May 31, 2013

Yesterday it was my privilege to speak at a Free State Foundation (FSF) event on “Ideas for Communications Law and Policy Reform in 2013.” It was moderated by my friend and former colleague Randy May, who is president of FSF, and the event featured opening remarks from the always-excellent FCC Commissioner Robert McDowell.

During the panel discussing that followed, I offered my thoughts about the problem America continues to face in cleaning up communications and media law and proposed a few ideas to get reform done right once and for all. I don’t have time to formally write-up my remarks, but I thought I would just post the speech notes that I used yesterday and include links to the relevant supporting materials. (I’ve been using a canned version of this same speech at countless events over the past 15 years. Hopefully lawmakers will take up some of these reforms some time soon so I’m not using this same set of remarks in 2027!)

I) The fundamental problem we face in the world of communications and media policy today is easy and diagnose and, at least in theory, easy to remedy.

The Problem= asymmetrical regulation / “unlevel playing field”

• Policymakers are imposing different regulatory policies on different layers of the modern information ecosystem. (This is sometimes referred to as the “regulatory silos” problem.)
• Regulatory silos and unlevel playing fields create 3 additional problems. They:

1. are unfair to those players who suffer under more onerous rules;
2. threaten to roll the old onerous rules on newer and less regulated speech and communications platforms and technologies; and,
3. create uncertainty and threatens investment and innovations.

The Solution (again, simple in theory but not in political reality) = level the playing field by deregulating down to achieve parity instead of regulating up

II) Let’s get more concrete about how to accomplish that sort of liberalization and level the playing field. Three simple reform ideas can help:

1. “MFN clause for communications and media policy”: To the extent Congress continues to place ground rules on the information sector at all, it should consider borrowing a page from trade law by adopting the equivalent of a “Most Favored Nation” (MFN) clause for communications and media policy. In a nutshell, this policy would state that: “Any operator seeking to offer a new service or entering a new line of business, should be regulated no more stringently than its least regulated competitor.” Such a MFN for communications would ensure that regulatory parity exists within this arena as the lines between existing technologies and industry sectors continue to blur. Placing everyone on the same deregulated level playing field should be at the heart of telecommunications policy to ensure non-discriminatory regulatory treatment of competing providers and technologies at all levels of government. In other words, to level the proverbial playing field properly, we should “deregulate down” instead of regulating up to place everyone on equal footing.
2. “Moore’s Law” for information technology laws and regulations: With information markets evolving at the speed of Moore’s Law, public policy must as well. Toward that end, every new technology proposal should include a provision sunsetting the law or regulation 18 months to 2 years after enactment. And this principle should apply retroactively so that old rules are sunset on a rapid timetable. If Congress deems them vital, they can always be reauthorized. [See my Forbes column on this proposal.]
3. Comprehensive FCC reform, downsizing & defunding: You can’t truly deregulate communications and media markets if the primary regulator (the FCC  in this case) remains large and is constantly growing its budget and responsibilities. Regulators exist to regulate! Only by downsizing and defunding them can we truly deregulate these markets. (Alfred Kahn and the Democrats taught us that in the late 1970s when the comprehensively deregulated airline and transportation markets and then moved to abolish the agencies that oversaw those sectors as well. They understood that the very existence of those agencies was a major contributing factor to economic inefficiency and crony capitalism.)

III) If wasn’t that long ago that this sort of an approach was considered the model for how to move forward

Following the lead of the Democrats who deregulated airlines and transportation sectors in the late 1970s, a number of scholars in the 1990s and 2000s devised comprehensive reform proposals for communications and media markets. (Two old PFF projects built on this):

• “The Telecom Revolution”: May 1995 proposal from @ a dozen different free-market think tank analysts to replace the FCC with a much smaller agency.
• “Digital Age Communications Act” project (“DACA”): a 2005-06 set of proposals from over 50 non partisan academics to make the FCC behave more like the FTC. [See this paper by Ray Gifford for a concise summary of the project and all the proposals).

Generally speaking, both projects focused on same 5 reform objectives:

1. Replacing the amorphous “public interest” standard with a consumer welfare standard, which is more well-established in field of antitrust law
2. Eliminate regulatory silos and level the playing field through deregulation
3. Comprehensively reform spectrum not just through more auctioning but through clear property rights
4. Reform universal service by either voucherizing it or devolving it to the States and let them run their own telecom welfare programs
5. Significantly reforming & downsizing the scope of the FCC’s power of the modern information economy

• If we can get those 5 things done, we will have accomplished true deregulation of America’s information marketplace.  What we don’t want is another fiasco like the Telecommunications Act of 1996, which represented an effort at managed competition. That law intentionally avoided providing clear deregulatory guidance and instead delegated broad and remarkably ambiguous authority to the FCC. This left the most important deregulatory decisions to the FCC and, not surprisingly, the agency did a very poor job of following through with a serious liberalization agenda.
• Again, regulators generally don’t deregulate themselves! It is against their self-interest. Congress must impose restraint on the agency and limit (or, better yet, end) its powers.

IV) Some will say communications & media markets are too important to deregulate. But the exact opposite is true.

• America’s Founders thought media was important enough that they made sure that the First Amendment clearly stated that “Congress shall make no law” as it pertains to freedom of speech and the press. They got it exactly right.
• We need to return to that Constitutional prime directive for information markets and start removing the layers of unjust and unnecessary regulation that have encumbered these markets for the past 100 years. America’s communications and media policy should once again be the First Amendment, not the Communications Act of 1934 or the Telecom Act of 1996.
• What we need, to borrow the title of Richard Epstein’s book of the same title, is “simple rules for a complex world.”  Those simple rules include: the law of contract, torts and common law, anti-fraud statutes, etc.
• Such simple rules can govern our complex information ecosystem the same way they govern every other sector of our capitalist economy. We don’t need a sector-specific regulator or body of regulation for communications, media, and the Internet.

[Video clip of my remarks from the FSF panel follows.]

It is unlikely there has ever been a more important figure in the history of regulatory policy than Alfred Kahn. As I noted in this appreciation upon his passing in December 2010, his achievements as both an academic and a policymaker in this arena where monumental. His life was the very embodiment of the phrase “ideas have consequences.” His ideas changed the world profoundly and all consumers owe him a massive debt of gratitude for reversing the anti-consumer regulatory policies that stifled competition, choice, and innovation. It was also my profound pleasure to get to know Fred personally over the last two decades of his life and to enjoy his spectacular wit and unparalleled charm. He was the most gracious and entertaining intellectual I have ever interacted with and I miss him dearly.

As I noted in my earlier appreciation, Fred was a self-described “good liberal Democrat” who was appointed by President Jimmy Carter to serve as Chairman of the Civil Aeronautics Board in the mid-1970s and promptly set to work with other liberals, such as Sen. Ted Kennedy, Stephen Breyer, and Ralph Nader, to dismantle anti-consumer airline cartels that had been sustained by government regulation. These men achieved a veritable public policy revolution in just a few short years. Not only did they comprehensively deregulate airline markets but they also got rid of the entire regulatory agency in the process. Folks, that is how you end crony capitalism once and for all!

Who could imagine such a thing happening today? It’s getting hard for me to believe it could. The cronyist cesspool of entrenched Washington special interests don’t want it. Neither do the regulators, of course. Nor do any Democrats or Republicans on the Hill. And all those self-anointed “consumer advocates” running around D.C. scream bloody murder at the very thought. All these people are happy with the regulatory status quo because it guarantees them power and influence–even if it screws consumers and stifles innovation in the process.

And so, when I reach my most pessimistic depths of despair like this, I go back and read Fred. I remember what one man accomplished through the power of ideas and I hope to myself that there’s another Fred out there ready to come to Beltway, shake things up, and start clearing out the morass of anti-consumer, anti-innovation regulations that pervade so many fields–but especially communications and technology.

I could cite endless wisdom from his 2-volume masterwork, The Economics of Regulation, but instead I will encourage you to pick that up if it’s not already on your shelf. It will forever change the way you think about economic regulation. Instead, I will leave you with a few things from Fred that you might not have seen before since they appeared in two obscure speeches delivered just a year apart to the American Bar Association. Just imagine being in the crowd when a sitting regulator delivered these remarks to a bunch of bureaucrats, regulatory lawyers, and industry fat cats. Oh my, how they must have all cringed!

Remarks before the American Bar Association, New York, August 8, 1978:

I believe that one substantive regulatory principle on which we can all agree is the principle of minimizing coercion: that when the government presumes to interfere with peoples’ freedom of action, it should bear a heavy burden of proof that the restriction is genuinely necessary…

Remarks before the American Bar Association, Dallas, TX, August 15, 1979:

I think it unquestionable that there is a basic difference between the regulatory mentality and the philosophical approach of relying on the competitive market to restrain people. The regulator has a very high propensity to meddle; the advocate of competition, to keep his hands off. The regulator prefers order; competition is disorderly. The regulator prefers predictability and reliability; competition has the virtue as well as the defect that its results are unpredictable. Indeed, it is precisely because of the inability of any individual, cartel or government agency to predict tomorrow’s technology or market opportunities that we have a general preference for leaving the outcome to the decentralized market process, in which the probing of these opportunities is left to diffused private profit-seeking. The regulator prefers instead to rely on selected chosen instruments, whom he offers protection from competition in exchange for the obligation to serve, as well as, often, transferring income from one group of customers to another — that is, using the sheltered, monopoly profits from the lucrative part of the business to subsidize the provision of service to other, worthy groups of customers. No matter that the social obligations are often ill-defined, and sometimes not defined or enforced at all; the protectionist bias of regulation is unmistakable.

This week, my colleague Jerry Brito asked me to guest lecture to his George Mason University law school class on regulatory process. He asked me to talk about one of my favorite topics: the sad, sordid history of regulatory capture. Regular readers will recall the compendium I posted here a few months ago [and that I continue to update] of selected passages from books and papers penned by various economists and political scientists who have studied this issue.

Again, it doesn’t make for pretty reading, but the lesson that history teaches is vital: No matter how noble the “public interest” goals of regulatory advocates or their specific proposals, the only thing that really counts is what regulation means in practice.  Regrettably, all too often, regulation is “captured” by various interests and used to their advantage, or at least to the disadvantage of potential competitors, new entrants, and innovation.

While I was gathering some materials for the case study portion of my lecture — which incorporates the history of telecommunications monopolization, broadcast industry regulatory shenanigans, and transportation / airlines fiascos — I figured I had to post a passage from one of my favorite books on regulation of all-time: Thomas K. McCraw’s brilliant Pulitzer Prize-winning 1984 book, Prophets of Regulation. In his chapter on the late great Alfred Kahn, the father of airline deregulation, McCraw recounts the history of the Civil Aeronautics Board (CAB) from its creation in the 1940s up until the time of Kahn’s ascendency to CAB chairman in the Carter Administration (and then the CAB’s eventual deregulation and abolition). Here’s the key passage from that history:

“Clearly, in passing the Civil Aeronautics Act [of 1938], Congress intended to bring stability to airlines. What is not clear is whether the legislature intended to cartelize the industry. Yet this did happen. During the forty years between passage of the act of 1938 and the appointment of [Alfred] Kahn to the CAB chairmanship, the overall effect of board policies tended to freeze the industry more or less in its configuration of 1938. One policy, for example, forbade price competition. Instead the CAB ordinarily required that all carriers flying a certain route charge the same rates for the same class of customer. […] A second policy had to do with the CAB’s stance toward the entry of new companies into the business. Charged by Congress with the duty of ascertaining whether or not ‘the public interest, convenience, and necessity’ mandated that new carriers should receive a certificate to operate, the board often ruled simply that no applicant met these tests. In fact, over the entire history of the CAB, no new trunkline carrier had been permitted to join the sixteen that existed in 1938. And those sixteen, later reduced to ten by a series of mergers, still dominated the industry in the 1970s. All these companies… developed into large companies under the protective wing of the CAB. None wanted deregulation.” (p. 263)

To reiterate: Zero new competitors were allowed. Zero price competition was allowed. And very little service innovation was permitted. It was a comfy little protected cartel from start to finish. It’s no wonder that “none wanted deregulation”!  Folks, if that isn’t the very definition of regulatory capture, I don’t know what is.

This is what makes Fred Kahn’s achievement all the more monumental.  Beyond his obvious mastery of the subject and rigorous documentation of regulatory failure in action, it was Fred’s sheer force of will and amazing spirit that provided the spark to get the deregulation of this mess moving forward. Against all odds — and with the help of some fellow liberal Democrats like Ted Kennedy, Ralph Nader, and Stephen Breyer — Fred did it.

And consumers owe him a huge debt of gratitude for it. Prices plummeted following the CAB’s abolition and countless new industry faces have come and gone since deregulation. Things haven’t been perfect by any stretch of the imagination, but can you imagine how much worse off we would have been absent Fred Kahn’s bold move to break the regulatory capture logjam and “free the skies” for competition?

Something to think about next time someone tells you that regulation is always in consumer’s best interests.

[P.S. – I posted a short obit here late last December remembering Fred Kahn upon his passing. I hope you read it if you haven’t already.  I still wish I could hear Fred speak just one more time. What a joy and inspiration that man was. I always treasured my moments with him. I still have the final email he sent me from early 2010 sitting in my inbox. I just can’t bring myself to delete it for some reason. He had passed along a nice note about a paper I had recently written. I practically cried when I read his note. One of my intellectual heroes had not only read something I penned but he had actually liked it! And he was 92 when he sent it to me.  Blows my mind.]

I was very sad to learn this morning of the death of Alfred Kahn, the brilliant economist known as “the father of airline deregulation.”  He was 93.  He was a brilliant, gracious and gregarious man who never failed to have a smile on his face and make those around him smile even more.  He will be missed.

Kahn has been an inspiration to an entire generation of regulatory analysts and economists. His 2-volume masterwork, The Economics of Regulation, has served as our bible and provided us with a framework to critically analyze the efficacy of government regulation. I have cited it in more of my papers and essays than any other book or article. The book was that big of a game-changer, as was Kahn’s time in government.  A self-described “good liberal Democrat,” Kahn was appointed by President Jimmy Carter to serve as Chairman of the Civil Aeronautics Board in the mid-1970s and promptly set to work with other liberals, such as Sen. Ted Kennedy, Stephen Breyer, and Ralph Nader, to dismantle anti-consumer cartels that had been sustained by government regulation. These men understood that consumer welfare was better served by innovative, competitive markets than by captured regulators, who talked a big game about serving “the public interest” but were typically busy stifling innovation and market entry.

His academic and policy achievements were significant, but what I will most remember about him is that, in a field not known for lively personalities or exciting discussions, Kahn was a consistent source of great wit and entertainment. He always managed to make even the most dreadfully boring of regulatory topics interesting and entertaining. Everyone would go away happy from a Fred Kahn talk.  Moreover, in a policy arena characterized by bitter intellectual bickering and endless bad-mouthing, Kahn always rose above the fray and held himself out to be a model of maturity and respectfulness. I have never heard a single person say a bad word about Alfred Kahn. Not one. That’s saying something in the field of regulatory policy!

One quick story about one of my interactions with Fred.  Back in 1994, someone in DC was hosting a lunch on telecom and regulatory policy and Kahn was the guest of honor. Knowing this in advance, I brought along my copy of The Economics of Regulation hoping for an inscription from Fred.  I handed it to him — I think my hands were shaking as if I were a teenage girl meeting the Jonas Brothers — and asked Fred for a simple autograph. He took a close look at my well-worn book, with scribblings in every margin, Post-It notes all over it, and every other page dog-eared for one reason or another.  The book was that important to me.  Seeing this, Fred flashed me one of his signature big grins and laughed as he wrote on the first page: “To a man of obviously excellent judgment!”  He handed it back to me and said, “I wish everyone cared enough about my book to deface it like that!”

We did, Fred. We did. Thank you for it, everything you taught us, and the example you set for all of us. You will not be forgotten.

by Adam Thierer & Berin Szoka

Move over, health care reform, climate change, and the economy. Judging by White House visits by various government agency heads, the Obama administration instead appears preoccupied with the re-regulation of communications, media, and the Internet. The Administration has just released logs of all visitors to the White House and Executive Office Buildings from Obama’s inauguration through August—including a staggering 47 visits by Federal Communications Commission (FCC) Chairman Julius Genachowski. By contrast, no other major agency head logged more than five visits.  Chairman Genachowski obviously has an audience with those at the highest levels of power, including the President himself, but this raises questions about just how “independent” this particular regulator and his agency really are.

Unprecedented Transparency by White House

The Administration deserves credit for releasing these visitor logs, which offer unprecedented transparency into the White House’s workings.  Unfortunately, the logs lack visitors’ affiliation and title, making it difficult to discern subtle patterns.  Furthermore, each entry indicates only one “visitee” and the total number of people involved.  Full disclosure requires identifying all meeting participants. Nonetheless, President Obama’s gesture is a great first step toward improved government accountability.

This openness allows us to ask questions we couldn’t pose for previous administrations—such as why the FCC head seems to have unparalleled access to the White House.  Lacking data from previous administrations, it’s difficult to make direct comparisons with previous FCC Chairmen, but the sheer number of visits by Chairman Genachowski leaves no doubt about his uniquely close involvement with the White House.

Given the ongoing economic/financial crisis, you might think that the President and White House officials would be meeting regularly with the heads of other independent agencies, such as the Federal Reserve, Securities and Exchange Commission, Small Business Administration, Federal Trade Commission, Federal Deposit Insurance Corporation, and National Labor Relations Board.  But not one of those agency heads appears to have logged a visit through August.  Climate change?  Just a single visit with the EPA Administrator.

And Cabinet-level officials?  Just 23 visits among 21 officials.  How is that possible, you might ask?  Apparently, Obama held just one full Cabinet meeting in the first seven months of his presidency (in May)—followed by a second meeting in November (well after the logs end). So, while President Obama and White House staffers were too busy to meet with Cabinet-level officials, they always made time for Chairman Genachowski.  Indeed, of the 1,786 visitors listed, only two logged more visits than Genachowski: Bancorp CEO Richard Davis (56) and Lee Sachs (61), Deputy Treasury Secretary.

President Obama appears as the “visitee” for two of Genachowski’s many visits, but could have met with him along with others if someone else was listed as the visitee.  More telling is that only 7 of his 47 visits included more than 10 attendees, and 25 were one-on-one—meaning that the FCC Chairman usually had a personal audience or a small audience.

Why all this attention for such a relatively obscure regulatory agency?  Genachowski served as Obama’s Technology Advisor during the campaign, the transition, and the beginning of the administration.  Eight of his 47 visits occurred before his long-anticipated nomination as FCC Chairman was announced on March 3, with 31 more before his June 29 confirmation.  Only eight occurred after his confirmation, but July and August are generally Washington’s slowest months, so it will be interesting to see just how many more visits he’s racked up since August when the administration releases updated logs.  Probably far more than any other independent agency head: Even his eight visits in July and August are remarkable compared to the near complete lack of visits by other agency heads.

How Independent?

Why care?  Well, at least in theory, “independent agencies” are supposed to be just that: independent.  They aren’t part of any Cabinet-level department and are supposed to be insulated from direct, day-to-day political pressure through bipartisan commissions, fixed terms, and safeguards against presidential removal.  At least that was always the “progressive ideal”: independent, “scientific” expert agencies and officials.

Of course, it was always more mythology than reality, since bureaucratic management is rarely “scientific” and these agencies are routinely subjected to blatant political pressure from White House officials and Congress.  Any history of America’s broadcast sector includes stories of political meddling at the FCC—often prompted by officials outside the agency.  Nonetheless, there are good reasons for maintaining a firewall between independent agencies and politicians—especially the FCC, whose extensive media regulations give it leverage that has been used to squelch political opposition to past administrations.

Even liberal Democrats, such as Alfred Kahn, a Carter appointee, have long recognized that the FCC is particularly vulnerable to “regulatory capture” by special interests.  That’s why the FCC requires disclose of all “ex parte” meetings between Commissioners or staff and “interested parties” outside government.  Genachowski’s predecessors, Kevin Martin and Michael Powell, were both criticized by Democrats for their close ties to the Bush administration, largely because of fears that special interests were influencing FCC decisions through the White House.  Had either Republican visited the White House half as often as Genachowski, there would have likely been howls from the Left about “undue influence.”

Interestingly, after his nomination, Chairman Genachowski met at least four times with Cass Sunstein, who now heads the Office of Information & Regulatory Policy (OIRA).  While Sunstein was not confirmed until September, their meetings raise important questions, since OIRA ultimately has final sign-off on the FCC’s regulations. Have the two continued to meet since?  If so, one hopes it was not to discuss Sunstein’s disturbing proposal for “electronic sidewalks” for cyberspace—a “Fairness Doctrine” for the Internet!

Is This Good or Bad for the Internet?

The critical issue is whether the FCC’s special relationship with the administration is beneficial for America’s dynamic digital economy.  That depends on whether you like the sound of a “New Deal 2.0” because—with the exception of some genuinely laudable eGoverment/transparency initiatives and openness to real spectrum reform (to be discussed at PFF’s upcoming event with Blair Levin this Tuesday, December 2nd)—that’s generally what the administration is pushing for in communications and media policy: command-and-control central planning of high-tech, backed by massive infrastructure subsidies and the re-regulation of sectors that have thrived since deregulation.

Under Genachowski, the FCC has essentially asserted jurisdiction over the entire Internet, recently inquiring about regulation of online television, video games, Google Voice, cloud computing, the Apple apps store, and resurrecting railroad-era concepts of common carriage “neutrality” in ways that could ultimately apply not only to broadband, but also to search engines, social networking, and devices.  As we’ve warned, Chairman Genachowski is leading us down the road of vastly increased government meddling across cyberspace.  That regulatory apparatus will inevitably be used as a tool of politics, if not by this administration, then by another less noble one in the near future—which might explain why some in this administration are so keenly interested in Chairman Genachowski’s FCC.

by Berin Szoka & Adam Thierer, Progress Snapshot 5.11 (PDF)

Ten years ago, Nobel Prize-winning economist Milton Friedman lamented the “Business Community’s Suicidal Impulse:” the persistent propensity to persecute one’s competitors through regulation or the threat thereof. Friedman asked: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft?” After yesterday’s FCC vote’s to open a formal “Net Neutrality” rule-making, we must ask whether the high-tech industry—or consumers—will benefit from inviting government regulation of the Internet under the mantra of “neutrality.”

The hatred directed at Microsoft in the 1990s has more recently been focused on the industry that has brought broadband to Americans’ homes (Internet Service Providers) and the company that has done more than any other to make the web useful (Google). Both have been attacked for exercising supposed “gatekeeper” control over the Internet in one fashion or another. They are now turning their guns on each other—the first strikes in what threatens to become an all-out, thermonuclear war in the tech industry over increasingly broad neutrality mandates. Unless we find a way to achieve “Digital Détente,” the consequences of this increasing regulatory brinkmanship will be “mutually assured destruction” (MAD) for industry and consumers.

New Fronts in the Neutrality Wars

The FCC’s proposed rules would apply to all broadband providers, including wireless, but not to Google or many other players operating in other layers of the Net who favor such broadband-specific rules. With this rulemaking looming, AT&T came after Google with letters to the FCC in late September and then another last week accusing the company of violating neutrality principles in their business practices and arguing that any neutrality rules that apply to ISPs should apply equally to Google’s panoply of popular services. In particular, AT&T accused Google of “search engine bias,” suggesting that only government-enforced neutrality mandates could protect consumers from Google’s supposed “monopolist” control.

The promise made yesterday by the FCC—to only apply neutrality principles to the infrastructure layer of the Net—is hollow and will ultimately prove unenforceable. The reality is that regulation always spreads. The march of regulation can sometimes be glacial, but it is, sadly, almost inevitable: Regulatory regimes grow but almost never contract. Indeed, in some ways, the prediction we made just three weeks ago is already coming true: The basic premise of neutrality regulation is already being proposed for other layers of the Internet—and not just by AT&T in retaliation. One need not agree with all of AT&T’s accusations to recognize that, whatever the FCC might say today, any large online intermediary with a popular platform potentially faces the threat of “network neutrality” mandates—because every platform is essentially a “network,” too. We’re not just talking about “search neutrality” (Google as well as Microsoft) but also about “device neutrality” (mobile handsets), “app neutrality” (Apple’s iTunes store, Facebook’s developers and Google’s Android mobile OS) and so on for social networking, email, instant messaging, online advertising, etc.

An open letter sent to FCC Chairman Julius Genachowski this week by 28 founders and CEOs of leading application providers—including Amazon, Google, Facebook, Netflix, Craigslist, Sony and Twitter—speaks generally about the need for the FCC to enforce a “guarantee of neutral, nondiscriminatory access by users.” While many of these signatories may have in mind ISPs as the network “gatekeepers” that need to be reined in by the FCC, the more successful among them are likely to find this letter used against them in the future—perhaps even by co-signatories—to advance a broad conception of what the government must do to ensure “openness” and “access” for platforms at all layers of the Internet.

Dumb Networks, Dumb Devices

The intellectual foundations for this regulatory creep have already been laid by groups like Free Press and Public Knowledge and law professors like Columbia’s Tim Wu, Harvard’s Jonathan Zittrain and Seton Hall’s Frank Pasquale. As originally conceived by Tim Wu in 2003, “network neutrality” is not unique to broadband networks: “the basic economic problem found in the network neutrality debate (a form of ‘platform exclusion’ or ‘vertical foreclosure’) can be found in many other markets.” Indeed, Wu’s popular Net Neutrality FAQ declares:

The promotion of network neutrality is no different than the challenge of promoting fair evolutionary competition in any privately owned environment, whether a telephone network, operating system, or even a retail store. Government regulation in such contexts invariably tries to help ensure that the short-term interests of the owner do not prevent the best products or applications becoming available to end-users.

Zittrain picked up where Wu left off in The Future of the Internet and How to Stop It—attacking, as the enemies of innovation, not ISPs but the supposedly “closed” platforms of Apple, TiVo and Microsoft’s Xbox. Zittrain warns that:

If there is a present worldwide threat to neutrality in the movement of bits, it comes not from restrictions on traditional Internet access that can be evaded using generative PCs, but from enhancements to traditional and emerging appliancized services that are not open to third-party tinkering.

Zittrain’s general solution is “API [Applications Programming Interface] neutrality:” If you create a platform (whether hardware or software) and begin allowing third-party contributions (“generativity”), you will lose all control over devices or applications that can run on that platform.

Those who offer open APIs on the Net in an attempt to harness the generative cycle ought to remain application-neutral after their efforts have succeeded, so all those who built on top of their interface can continue to do so on equal terms…. [N]etwork neutrality ought to be applied to the new platforms of Web services that, in turn, depend on Internet connectivity to function.

Clearly, if Zittrain and his allies have their way, the sort of neutrality mandates envisioned by the FCC or some Congressmen for ISPs will eventually cover companies such as Apple, Google, Facebook, Myspace, Twitter and Amazon—all singled out by Zittrain in a New York Times op-ed in July:

If the market settles into a handful of gated cloud communities whose proprietors control the availability of new code, the time may come to ensure that their platforms do not discriminate. Such a demand could take many forms, from an outright regulatory requirement to a more subtle set of incentives — tax breaks or liability relief — that nudge companies to maintain the kind of openness that earlier allowed them a level playing field on which they could lure users from competing, mighty incumbents.

Frank Pasquale agrees on the need to restrain all “the dominant players at all layers of online life,” but focuses on his demand for a Federal Search Commission to control supposedly “biased” search results. While the FCC wrings its hands over “managed services” offered by ISPs, search engines are increasingly offering their own value-added services by “blending” algorithmically-derived results with special features like maps, videos, books or music depending on what the search term suggests the user is interested in. “Artificially” ensuring that these features appear on the first page of search results is clearly non-neutral, and necessarily involves search engines making ”managed” decisions as to whose features to include. Yet such features also clearly benefit users—dramatically improving the usefulness of search engines and helping to sustain struggling business models like music retailing.

But one need not resort to the works of “ivory tower” academics to see the slippery slope we’re already tumbling down with the infinitely elastic principle of “neutrality.” The prospect of the FCC gradually transforming into a “Federal Information Commission” becomes more apparent when one reads the Wireless Innovation and Investment Notice of Inquiry recently released by the FCC:

As other approaches, such as cloud computing, evolve, will established standards or de facto standards become more important to the applications development process? For example, can a dominant cloud computing position raise the same competitive issues that are now being discussed in the context of network neutrality? Will it be necessary to modify the existing balance between regulatory and market forces to promote further innovation in the development and deployment of new applications and services?

One can imagine how some might use such language to accuse Google of being in “a dominant cloud computing position” such that “the context of network neutrality” will be applied to cloud service (like Google Voice) to “modify the existing balance between regulatory and market forces” through regulation. Indeed, that’s precisely what AT&T has suggested in recent letters (September 25 ^th and October 14 ^th) to the FCC.

AT&T’s partner Apple has already been the subject of such attacks for its decision to block the Google Voice app earlier this summer. The incident marked the beginning of open warfare between Google and AT&T/Apple. The FCC quickly jumped into the mix, first questioning how Apple manages its iTunes apps store for the iPhone, then questioning how Google runs its free Voice application. What legal authority the FCC has over either service is far from clear, but Apple seems to have gotten the message: It recently approved the Spotify music streaming app for the iPhone, which could be a serious competitive threat to the iTunes music store. This small incident highlights how easily regulators can impose their will through informal mechanisms like open-ended investigations even without clear authority to issue rules or bring enforcement actions. Yet none dare call it what it is: regulatory blackmail.

The Inevitability of Regulatory Capture

No doubt, other industry players will cheer on such regulatory harassment of the titans of tech—and maybe even demand more of it. Regulatory creep is driven by more than the self-interests of every bureaucracy to expand its own mission, budget and staff. As the Electronic Frontier Foundation has noted, “Experience shows that the FCC is particularly vulnerable to regulatory capture.” While lobbyists play an important role in defending business from government, all too many businesses naively look at government as a beast that can be tamed, trained, and turned to one’s own advantage, and often try to use the expanding regulatory apparatus to their own advantage or simply throw their competitors under the bus to save themselves. The result is a Hobbesian regulatory “war of all against all” within industry.

As Professor Alfred E. Kahn explained in his 2-volume opus, The Economics of Regulation, all regulation—however high-minded—is inevitably captured by special interests because:

When a commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates, to assure a desirable performance by relying on those monopolistic chosen instruments and its own controls rather than on the unplanned and unplannable forces of competition. […] Responsible for the continued provision and improvement of service, [the regulatory commission] comes increasingly and understandably to identify the interest of the public with that of the existing companies on whom it must rely to deliver goods.

If Internet regulation follows the same course as other industries, the FCC and/or lawmakers will eventually indulge calls by all sides to bring more providers and technologies “into the regulatory fold.” Clearly, this process has already begun. Even before rules are on the books, the companies that have made America the leader in the Digital Revolution are turning on each other in a dangerous game of brinksmanship, escalating demands for regulation and playing right into the hands of those who want to bring the entire high-tech sector under the thumb of government—under an Orwellian conception of “Internet Freedom” that makes corporations the real Big Brother, and government, our savior.

Toward a Less MAD World: Digital Détente

Sincere defenders of real Internet Freedom—that is, freedom from government techno-meddling—recognize that there will always be disputes over how companies deal with each other online across all layers of the Internet. The question is not whether we need a technical coordinating mechanism for handling such disputes. Someone should mediate conflicts over alleged deviations from abstract neutrality principles. But should that arbitrator be an inherently political body like FCC? Or should we instead look to truly independent, apolitical arbitrators like the Internet Engineering Task Force or collaborative efforts like the Network Neutrality Squad? Such alternative dispute resolution mechanisms and fora need not have the power of law to be effective: The weight of their expert opinion, based on careful investigation of the facts, would likely resolve most disputes, because companies have strong reputational incentives to comply with reasoned rulings by truly neutral experts. And the white hot spotlight of public attention has a way of disciplining marketplace behavior as well.

Government would still have a role to play, of course, in enforcing antitrust laws where anticompetitive harm to consumers can be proven, and in enforcing the promises companies make to consumers. Ultimately, however, certain business models and technologies require non-neutral treatment, and the best remedy for concerns about non-neutrality is competition itself: In the high-tech sector more than any other, disruptive innovation makes it difficult for even the most successful companies to stay on top forever. Competitive entry—or even the threat of new entry—provides a powerful check on the power of so-called “gatekeepers,” but even more important is the prospect that today’s leaders will be tomorrow’s laggards: There’s little reason to think Google (search and advertising), Apple (smart phones and music) and Facebook (social networking) won’t someday find themselves playing catch-up, just as IBM (computers), Microsoft (desktop software and search), Friendster and MySpace (social networking), and Yahoo! and AOL (web portals) have had to do.

“Digital Détente” would require that all parties concede something and work constructively toward a more “peaceful” ( i.e., less regulatory) resolution. And yet, no Internet company wants to disarm unilaterally, foreswearing politics as a continuation of competition by other means. Only through multilateral disarmament could they break out of the current cycle of regulatory one-upmanship: If the companies in the Internet ecosystem could form a united front against increased government regulation and in favor of removing existing regulatory obstacles to competition, they could all return to their core competencies of creativity and innovation.

The alternative is a regulatory “nuclear winter”: high-tech titans turning their political fire on each other, catching innocent third parties in the cross-fire and bringing a dark cloud of government regulation over the entire Internet. Such increased regulation would stifle investment and innovation throughout the Internet ecosystem. Thus, it is consumers who will ultimately suffer most from the tech industry’s suicidal impulse, as their choices and digital lives are impoverished. For their sake, we hope all industry players will step back from the brink to avoid such high-tech mutually assured destruction.

I’ve spent a lot of time here deconstructing and criticizing the proposals set forth by the Free Press, the radical media “reformista” group founded by the prolific Marxist media theorist Robert McChesney.  I have been trying to shine more light on their proposals and activities because I believe they are antithetical to freedom of speech and a free society.  That’s because, as media scholar Ben Compaine has noted, “What the hard core reformistas really want, it seems, is not diversity or an open debate but a media that promotes their own vision of society and the world.”  That’s exactly right and, more specifically, as I argued in my 2005 Media Myths book, the media reformistas want to impose this control by taking the fantasy that “the public owns the [broadcast] airwaves” and extending it to ALL media platforms and outlets.  In other words, McChesney and the Free Press want an UnFree Press.  To cast things in neo-Marxist terms that they could appreciate, they want to take control of the information means of production.  And it begins, McChesney argues, by all of us having to give up this “sort of religious attachment to the idea of a ‘free-press'” from which we all suffer.

Some people accuse me of “red-baiting” or “McCarthyite” tactics when I use the “M-word” (Marxism) or the “S-Word” (socialism) to describe McChesney, the Free Press, and the movement they have spawned.  But these are labels with real meaning and ones that McChesney himself embraces in his work. In his 1999 book Rich Media, Poor Media, he says that “Media reform cannot win without widespread support and such support needs to be organized as part of a broad anti-corporate, pro-democracy movement.” He casts everything in “social justice” terms and speaks of the need “to rip the veil off [corporate] power, and to work so that social decision making and power may be made as enlightened and as egalitarian as possible.”  What exactly would all that mean in practice for media? In his 2002 book Our Media, Not Theirs: The Democratic Struggle against Corporate Media with John Nichols of The Nation, McChesney argues that media reform efforts must begin with “the need to promote an understanding of the urgency to assert public control over the media.” They go on to state that, “Our claim is simply that the media system produces vastly less of quality than it would if corporate and commercial pressures were lessened.”

If you want additional proof of his intentions, then I encourage you to read this lengthy interview with McChesney that appears in the new edition of The Bullet, an online newsletter produced by the Canada-based “Socialist Project.”  (If you ask me, there’s something strangely appropriate about a socialist newsletter named “The Bullet” in light of the millions of people who died while living under socialist tyranny!)  Anyway, let’s ignore that and focus on what neo-Marxist media reform entails according to McChesney.  Because never before has he laid his cards on the table as clearly as he does in this interview.

The “Struggle” for “Media Democracy”

In the interview, as in all his work, McChesney speaks repeatedly about the Marxist concept of “struggles,” which  usually refers to class struggles and worker struggles. But McChesney’s work focuses on “media democracy struggles” as part of an overall struggle for “social justice.”  He says:

Instead of waiting for the revolution to happen, we learned that unless you make significant changes in the media, it will be vastly more difficult to have a revolution. While the media is not the single most important issue in the world, it is one of the core issues that any successful Left project needs to integrate into its strategic program.

In other words, media reform is part of The Big Struggle. The Big Struggle is the effort to overthrow free-market capitalism. And the struggle for “media democracy” is crucial to that, you see, because we are all just pawns whose minds are being manipulated by some far-off corporate puppet-masters in New York and L.A., who are, of course, just feeding us nothing but pro-capitalist propaganda 24/7.  Thus, we have to burn the village to save it, McChesney says:

Many say that corporate journalism, based on profit maximization, best serves a free and democratic society. The position is incorrect. The connection of capitalism to journalism, which has always been fraught with problems, has always been unstable. The relationship between capitalism, journalism, and democracy has never been a sure thing. In the U.S, the notion that capitalism is the natural steward of journalism and should be left alone to provide for a free and self-governing society refers to a period that began during the 19th century. This period ended when owners realized they could make a lot of money by turning journalism into big business. Corporations are not in a position to generate and pay for quality journalism. The news is not a commercial product. It is a public good, necessary for a self-governing society.

In other words, down with private media!  McChesney basically declares that the entire history of private media in America to be one gigantic case of market failure and must be abandoned.

Subsidies to “Save Journalism”

But what’s going to replace private media once McChesney and his media reformistas have moved the regulatory wrecking ball in?  In a nutshell, he wants massive state subsidization of the media:

Once we accept this [the supposed “public goods” nature of all media], we can talk about the kind of media policies and subsidies we want. What are the best ones? How should they be implemented? We are now trying to answer those questions and organize around them.

Herein lies one of the great ironies of McChesney’s work: He spends a great deal of time arguing that the entire history of American media has basically been one big government-created construct (monopolies, entry barriers, subsidies, etc), only to turn around and advocate massive state intervention and subsidies as a solution!  McChesney plays revisionist historian and even tries to paint Jefferson and Madison as media socialists because postal rates from the founding period on down have been reduced for print media mailings. Somehow, McChesney reads this to mean that “the U.S. state has always played a direct and indirect role in facilitating and legitimizing the corporate media system.”  Which is rubbish. The idea that postal subsidies have created “the corporate media system” is preposterous. McChesney is on stronger ground in arguing the state has occasionally helped foster and then protect monopolies, but that is a function of the very “public utility” regulatory regime that McChesney favors! [More on this point down below.]

Meanwhile, in true Rahm Emanual-ian “you-never-want-a-crisis-to-go-to-waste” fashion, the Free Press has started a new project to “Save the News” and move America “Toward a National Journalism Strategy” by endorsing a lot of the same regulations, subsidies, and tax credits that McChesney and John Nichols recently advocated in their Nation magazine essay, “The Death and Life of Great American Newspapers.” As I noted in my City Journal response to that essay back in March, you can file this all under “socializing media in order to save it,” complete with Soviet-style 5-year plans dictated by some faceless elite inside a Beltway bureaucracy. Oh, and there’s the little matter of $60 billion price tag that taxpayers will be left footing.  (But hey, what’s another $60 billion these days?)  Even Free Press favorite Dan Rather is on board with his plan to have President Obama give us “The News America Needs” by “form[ing] a commission to address the perilous state of America’s news media.”  Perhaps once the car commission folks get done driving the U.S. auto industry into the ground they can shift gears, so to speak, and see what they can do to steer journalism onto a supposedly better path.

Down with Advertising

If McChesney and Free Press don’t succeed in destroying private media with their regulatory plans, there’s always Plan B… bleed free market media operators and Internet companies dry by taking away their mother’s milk, advertising.  McChesney argues that “the Internet is increasingly hyper-commercialized” and it is “open[ing] our entire lives to 24/7 injections of advertising messages.”  Thus, wouldn’t you know it, yet another “struggle” is in order!

We need to organize against hyper-commercialism. This is an easy-sell for the Left. We understand that advertising is not something done by all people equally, but rather, done by a very small group of people working on behalf of multinational corporations. Advertising is commercial propaganda…  Advertising is the voice of capital. We need to do whatever we can to limit capitalist propaganda, regulate it, minimize it, and perhaps even eliminate it. The fight against hyper-commercialism becomes especially pronounced in the era of digital communications.  […] There is a fundamental crisis when you are in a world that is entirely commercial, in terms of the integrity of speech and thought. We are at the tipping point and we need to struggle directly against it.

Struggle, struggle, struggle!

Of course, McChesney will have plenty of allies in this particular struggle as Washington continues to wage a war against advertising of all sorts. Of course, there really is no free lunch in this world and something will have to pay for serious news-gathering (and entertainment, for that matter). Of course, McChesney and his Free Press allies will, no doubt, respond that still more subsidies are in order!  There is, apparently, always someone else in their world to whom the buck can be passed.  [But I wonder: Who would be left to pay all the taxes needed to support public media if McChesney’s “struggle” to overthrow The Man succeeds??]

Net neutrality & Infrastructure Nationalization

And don’t for one minute think that McChesney and Free Press are only out for the old media operators.  They’re out for private broadband and Internet players as well.

When speaking about the centrality of Net neutrality regulation to this “struggle” and coming “revolution,” McChesney does a nice job reminding some of us why we have been so concerned about politicizing a debate over network engineering when he says: “What we want to have in the U.S. and in every society is an Internet that is not private property, but a public utility.”  Ah yes, because public utilities have been soooo efficient and innovative in other contexts!  Please.

In advocating increased regulation or state-ownership of communications networks or broadband companies and connections, McChesney seems utterly oblivious to the fact that the very state power he advocates on one hand is the same state power that private parties can corrupt on the other.  He says, for example, that “Our struggle to make the Internet into a public utility conflicts with the interests of telephone and cable firms,” because “Their power rests upon their ability to successfully buy off politicians.”  How does he not see the contradiction?  He’s certainly right to fear that public officials can be co-opted by private interests. (Read up on your public choice theory, buddy!)  But I suppose McChesney believes that his perfect socialist state will be immune to these pressures because it will be run by enlightened, public-minded philosopher kings… you know… like himself.  But that’s nonsense.  See my old essay on the fantasy of “Building a Better Bureaucrat” or Tim Lee’s old essay on “Real Regulators” for more details on why it never works out that way in practice. Or, better yet, since I know he would never read anything I penned on the subject, I encourage McChesney to take a hard look at the definitive 2-volume Economics of Regulation by a far more experienced progressive Democrat, Professor Alfred E. Kahn. In Kahn’s masterwork, you will find the following words of wisdom (and caution) from someone who spent a lifetime studying these issues:

When a commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates, to assure a desirable performance by relying on those monopolistic chosen instruments and its own controls rather than on the unplanned and unplannable forces of competition. […] Responsible for the continued provision and improvement of service, [the regulatory commission] comes increasingly and understandably to identify the interest of the public with that of the existing companies on whom it must rely to deliver goods.

McChesney makes one final point about Net neutrality that is worth highlighting. When asked whether he had any reservations about making short-term alliances with new media companies or Internet operators such as Google, eBay, Amazon, and Microsoft in the push for Net neutrality regulations, McChesney says: “Absolutely.. But I’ve learned, by participating in over a decade of specific media struggles, that when you are in the short-term and you are fighting to win, sometimes you make tactical alliances.” Nonetheless, he notes, ” the ultimate goal is to get rid of the media capitalists in the phone and cable companies and to divest them from control.” And, so, the ends justify the means in terms of striking short-term alliances with those evil, blood-sucking capitalists.  I hope the folks at Google, eBay, Amazon, and Microsoft are reading McChesney’s radical thinking on communications policy and realize that he and his Free Press reformistas will eventually turn their sights on them just as soon as they are finished socializing the infrastructure layer of the Internet.

Conclusion: Against Media Tyranny

In a very strange sense, I admire Robert McChesney.  He is a man of principle.  And he isn’t ashamed to advocate his principles publicly (whereas some of his Free Press disciples do a very nice job disguising their true intentions).

That being said, McChesney’s principles are dangerous ones. Very dangerous.  They are antithetical to a free society, freedom of speech, and technological progress.  At its core, as I noted in my old essay, “Your Soapbox is My Soapbox,” the repugnant morality behind this “media access” movement is that nothing is truly yours.  “Media democracy” means everything is up for grabs.  Here’s how I put it in that old “soapbox” essay:

Imagine you built a platform in your backyard for the purpose of informing or entertaining your friends of neighbors. Now further imagine that you are actually fairly good at what you do and manage to attract and retain a large audience. Then one day, a few hecklers come to hear you speak on your platform. They shout about how it’s unfair that you have attracted so many people to hear you speak on your soapbox and they demand access to your platform for a certain amount of time each day. They rationalize this by arguing that it is THEIR rights as listeners that are really important, not YOUR rights as a speaker or the owner of the soapbox. That sort of scenario could never happen in America, right? Sadly, it’s been the way media law has operated for several decades in this country. This twisted “media access” philosophy has been employed by federal lawmakers and numerous special interest groups to justify extensive and massively unjust regime of media regulation and speech redistributionism. And it’s still at work today.

Indeed, McChesney has taken this old “media access” movement that Jerome Barron, Owen Fiss, Cass Sunstein and others pioneered long ago, and advanced it to a whole new level, and to its logical conclusion.  The aim is not just to co-opt someone else’s soapbox; it is to smash their soapbox into pieces. It is to tear the very fabric of the First Amendment into shreds and rebuild “media democracy” around the principles not of true freedom, but of state servitude.  You only have as much freedom to engage in speech, reporting, or entertaining as your media overlords will allow.  And God help you if any of it proves popular because then they will really want to crush you like an ant!

I’ll close this rant the same way I concluded my earlier “soapbox” rant:

This arrogant, elitist, anti-property, anti-freedom ethic is what drives the media access movement and makes it so morally repugnant. Freedom doesn’t begin by fettering the press with more chains, it begins by removing those that already exist and then erecting a firm wall between State and Press. The media access crowd has succeeded in breaching that wall with seven decades of misguided and unjust regulation of the press. The movement back toward a truly free press begins by understanding the error in their thinking, rejecting that reasoning, and then embracing, once again, the original vision of the First Amendment as a bulwark against government control of speech and the press.

Writing at Slate, Tim Wu tries to make Obama out to be the real Big Government candidate on media policy, who will deliver “if not a chicken in every pot, a fiber-optic cable in every home.” By contrast, Wu implies that McCain is just another pro-big business lackey who doesn’t understand “that the media and information industries are special—that like the transportation, energy, or financial industries, they are deeply entwined with the public interest.” Wu goes on to say:

Ultimately, most of the difference in Obama’s and McCain’s media policies boils down to questions about whether the media is special and a dispute over how much to trust the private sector. Camp McCain would tend to leave the private sector alone, with faith that it will deliver to most Americans what they want and deserve. The Obama camp would probably administer a more frequent kick in the pants, in the belief that good behavior just isn’t always natural.

First, as a factual matter, Wu is just wrong about McCain being some sort of a radical hands-off, pro-market liberalizer on media policy issues. Oh, if only that were true! But for those of us who have been in DC covering telecom and media policy for many years, it is widely understood there is no nailing down John McCain on any tech, telecom or media policy issue. He’s been all over the board. While he has sponsored or supported some deregulatory initiatives on the telecom front in the past, he’s also been a supporter of other regulatory causes. His battles with broadcasters and cable, for example, are well-known. Most recently, McCain has been leading the effort to impose a la carte mandates on cable and satellite operators. And if you’re all about Big Government credentials, then don’t forget McCain-Feingold, a law that made it a felony for corporations, nonprofit advocacy groups, and labor unions to run ads that criticize–or even name or show–members of Congress within 60 days of a federal election. And then there was the far more troubling McCain-Feingold II. Although it did not pass, McCain’s measure would have required broadcasters to run 12 hours of “candidate-centered and issue-centered programming” in the six weeks prior to primary and general elections—without giving broadcasters any control over those 12 hours (half of which would have had to run during prime time). The bill would have created a voucher system for the purchase of airtime for political advertisements, financed by an annual spectrum-use fee on all broadcast license holders. In sum, the legislation would have forced broadcast stations to pay a tax to the federal government that would in turn finance a pool of funds that politicians could turn around and spend to run ads on those very stations!

This sounds like the sort of Big Government Media Agenda that should make Tim Wu happy, but he doesn’t mention any of it in his essay.

But let me address the more fundamental, and quite mistaken, premise that underlies Wu’s essay — namely, that increased government activism in the media and broadband marketplace will somehow lead us to techno-nirvana. When Wu states that “the difference in Obama’s and McCain’s media policies boils down to questions about whether the media is special and a dispute over how much to trust the private sector,” he conveniently ignores the flip-side of that statement. That is, shouldn’t the real question here be: “How much do we trust the public sector”? Wu apparently assumes that “public interest” regulation will be all wine and roses. Enlightened, benevolent lawmakers and regulators who understand that media is “special” will concoct just the right mix of regulatory policies that will be pro-consumer, pro-democracy, and pro-free speech.

Sorry, but I’m not buying it. One would need to ignore 100 years worth of experience to believe such fanciful notions, and Wu seemingly does. Somehow, all will be different now. Regulators won’t be captured by special interests. Command-and-control regulation will suddenly become far more efficient and not deter innovation. And policymakers will resist the urge to censor speech.

Do you believe that story? If you’ve read your economic history, you’re probably just as skeptical as I am. It is revisionist history to say that the era of regulated monopoly and “public interest” media regulation was some sort of pro-consumer, pro-innovation, pro-free speech paradise. In reality, a “chicken in every pot” means a regulator on every cyber-corner. And I just don’t understand how someone as smart as Tim Wu thinks the entire process won’t once again come to be captured by the very interests he hopes to “kick in the pants.” They will be wearing the pants before it is over!

I invite Tim Wu and all his activist-minded friends on the Left to take another look at the definitive 2-volume Economics of Regulation by a more enlightened and experienced Democrat, Professor Alfred E. Kahn. In that masterwork, they will find the following words of wisdom (and caution):

When a commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates, to assure a desirable performance by relying on those monopolistic chosen instruments and its own controls rather than on the unplanned and unplannable forces of competition. […] Responsible for the continued provision and improvement of service, [the regulatory commission] comes increasingly and understandably to identify the interest of the public with that of the existing companies on whom it must rely to deliver goods.