At FCC, Internet Connect to You!

Yakov Smirnoff‘s short lived fame died off with the Soviet Union. Little did he know, his unique style of comedy could have lived on indefinitely by mocking the Federal Communications Commission (FCC). In a real-life example of Mises’ theory of interventionism, where the effects of one bad regulation is the catalyst for more bad regulation, the FCC is advocating additional price controls for dedicated line services. Of course, dedicated line services are only supplied by FCC backed Baby Bells, which have regional monopolies of these services.

Hmmmm, I seem to remember from Microeconomics 101 that monopolies tend to raise price…

Instead of more price controls and regulations, why doesn’t the FCC just let any firm compete? Proponents of regulation claim that Baby Bells are natural monopolies. If that is true, their positions of dominance are unchallengeable and they won’t need regulations to protect them. William Melody’s argument, which led to MCI’s challenge of the AT&T monopoly, was successful in busting that “natural monopoly.”

The only way to tell that an industry is a natural monopoly is to allow competition. If you don’t allow competition, what’s so natural about the monopoly?