FCC vs. Innovation: Not Too Many Years Ago, It Seemed That Fast-Moving Technology Would Happily Put the Government's Top Communications Regulator out of Business. Nick Schulz Wonders Why That Hasn't Happened

By Schulz, Nick | The American (Washington, DC), January-February 2008 | Go to article overview

FCC vs. Innovation: Not Too Many Years Ago, It Seemed That Fast-Moving Technology Would Happily Put the Government's Top Communications Regulator out of Business. Nick Schulz Wonders Why That Hasn't Happened


Schulz, Nick, The American (Washington, DC)


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JUST A DECADE ago there was discussion in Washington about abolishing, or at least significantly streamlining, the Federal Communications Commission (FCC). It was thought that technological innovation had rendered obsolete the agency that regulates telecommunications and broadcasting.

An obscure but influential book by former MIT professor and telecom analyst Peter Huber, Law and Disorder in Cyberspace, helped make the case for eliminating the agency. Huber maintained that technological change made regulation awkward, if not impossible. Simply put, Huber claimed, "technology is advancing much faster than the Commission can make policy."

How fast has technology advanced? Huber's book was published in 1997. Look at what has happened in a decade.

In that time, Internet giant AOL and media giant Time Warner merged, and many now think they will split apart. XM Radio launched its satellite service. Google had the most heralded IPO in modern business history. MySpace, Facebook, and Second Life changed how young people (and, increasingly, older people) interact. Microsoft's XBox and Nintendo's Wii altered how kids think about video gaming. In the past two years, YouTube has upended the video market, and the iPhone, just months old, is remaking the cellular-phone and personal-digital-assistant (PDA) markets.

Huber's arguments were practical, not ideological. It was not that FCC commissioners weren't smart and dedicated civil servants. They were then,just as they are today. Rather, the nature of the changes unfolding, with entirely new industries and techniques, challenged the existing order and put sensible regulation out of reach.

The same tech-driven tumult that was transforming communications turned other industries upside down, too. Former Clinton administration official Robert Reich notes in his new book, Supercapitalism, that technology prompted a new questioning of regulation.

Consider air travel. Reich points out that "advances in telecommunications and aircraft design (high-strength materials, better aerodynamics, improved fuel economy) created new possibilities" for air transport, "so in 1978, Congress deregulated the airlines, and began closing down the Civil Aeronautics Board," the federal authority that regulated aviation.

Technology revolutionized the shipping industry as well. Thanks to new container technologies that improved efficiencies and shipping possibilities, "in 1980, Congress deregulated trucking and railroads, and began shutting down the Interstate Commerce Commission," Reich says.

Not so with the FCC. And yet it continues to be tripped up by technological changes.

Consider the fight over what's called "a la carte" cable. The idea is that cable companies should be forced to provide only the channels that individual subscribers select, instead of bundling channels together in packages. So if you want ESPN, CNN, Fox, and Discovery, but nothing else, you should be allowed to select only those, as if ordering from an a la carte menu.

Several activist groups have pushed for mandating a la carte cable. These groups have powerful allies in Congress and in current FCC Chairman Kevin Martin.

At first blush, the arguments for a la carte seem sensible--why make consumers pay for channels they don't want? …

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FCC vs. Innovation: Not Too Many Years Ago, It Seemed That Fast-Moving Technology Would Happily Put the Government's Top Communications Regulator out of Business. Nick Schulz Wonders Why That Hasn't Happened
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