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OpenMarket: Telecommunications

  • CEI Statements on the Failed Comcast-Time Warner Merger

    April 27, 2015 3:35 PM

    CEI responded to the news that the Comcast-Time Warner merger failed. You can read more analysis from CEI's Vice President for Policy Wayne Crews here.

    "The deck was stacked against this deal from the beginning: Comcast and Time Warner Cable had to seek permission to merge from not only the Department of Justice, but also the Federal Communications Commission. While the DOJ must win in court before it can block an acquisition, the FCC has unilateral power to send a transaction into regulatory limbo for years before the merging parties get a chance to be heard by an independent federal judge. This process turns the rule of law on its head, and only Congress can fix it." 

    -- Ryan Radia, Associate Director of Technology Studies

    “The collapse of the Comcast-Time Warner merger merely because of the interference of government, not because of actual market rejection, illustrates the overwhelming power of the modern state to undermine the advance of communications technologies and services. These bureaucrats have decided on our behalf to award other communications industry companies a government-granted reprieve from the pressures of competition.”

    -- Wayne Crews, CEI Vice President for Policy

  • Net Neutrality Vote Shows Congress Must Rein In and Replace the FCC

    February 26, 2015 4:45 PM

    The separation of powers doctrine demands that Congress not tolerate unelected federal agencies going it alone and making binding law. 

    The Federal Communications Commission (FCC), on a party line vote, has elected to impose so-called net neutrality regulation via a reclassification of the formerly lightly regulated Internet under Title II of the Communications Act. 

    Somehow, we suddenly need government force to protect the freedom we’ve known online, with a 332-page set of rules no one outside the agency has seen. 

    Thursday's Federal Communications Commission (FCC) net neutrality conceit should trigger the Congress’ replacement of this rogue agency with something that recognize  boundaries, something attuned to the future and reality. 

    Airwave scarcity and public interest concerns are the causes that long presumably justified telecommunications regulation. But thanks to Thursday's FCC vote, the FCC bureaucracy itself undermined those values with a new regime that will inhibit new infrastructure development and ultimately freedom of speech itself. 

    Under utility-style micromanagement of the Internet, which is what Title II would allow, the agency will be reenergized as a magnet for political cronyism. The “bad guys” or villainous “gatekeepers” according to net neutrality partisans are the Internet service providers. 

    But ironically, with net neutrality, there's a much greater chance of there still being an AT&T and Comcast 100 years from now since upstart competing and overlapping infrastructures can scarcely cope with the likes of Title II. (Here’s Comcast’s highly promoted advertisement in support of enforceable net neutrality rules.) 

  • Premature Capitulation?

    February 3, 2015 4:13 PM

    Over the decades I’ve spent in this Heart of Darkness (a.k.a., the bowels of American politics), I’ve learned two lessons that have encouraged the steady politicization of the American economy:

    • When the right time comes, I’ll take a principled stand (sadly, too often, once you’re no longer in office); and
    • Of course, we know the “right” answer is often to liberalize current rules, but that would be politically naïve, so our goal should be to avert even worse rules (but, of course, sacrificing principle rarely assuages those favoring more government control).

    And both lessons seem to have been forgotten in the Republican rush to avert the threatened action by FCC Chairman Tom Wheeler to transform the Internet into a federally regulated utility. Senator Thune, Representative Upton, and Representative Walden have proposed a “compromise” bill that would strip the FCC of its purported authority to reinterpret the Communications Act to consider the Internet as a “public” utility.

    Unfortunately, their language concedes perhaps the most dangerous part of such a reclassification: removing the freedom of network owners to price their services. Well, actually not quite: the Republicans would remove providers’ ability to price in ways that some view as “discriminatory.” They explicitly mention pricing policies that might result in “throttling” (like congestion-managed toll lanes?), unreasonable “network management” (as decided by whom?), and “paid prioritization” (like that used for just-in-time transportation services by most transport companies?).

    But proponents argue if FCC is left alone, its rules might even be worse. And, indeed, they probably will be—but FCC action would be administrative, reversible by a future administration or via inevitable legal challenge. If Congress—led by erstwhile opponents of net neutrality—accedes to forcing the Internet into quasi-utility status, the losses could be permanent.

    Those contemplating this action should reflect on the consequences of similar regulation on an earlier network—the railroads. This was America’s first national network, knitting together then small town and rural America into the national economy. Railroads dramatically lowered transportation costs—changing the economy and resulting in growth in some regions, contraction in others.

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