The Dangers of Over-Regulating Competition
As a regular reader of Steve Pearlstein's Washington Post's business column, I was dismayed at the consistent pro-regulation frame of Sunday's piece on the AT&T-T-Mobile acquisition: "The Revenge of the Baby Bells."
The hallmark of longstanding bipartisan competition policy has been that if market players have the freedom to succeed or fail at differentiating, innovating and investing to meet consumers' rapidly evolving needs, market forces can maximize consumer welfare much better than FCC regulators can.
- Current fierce communications sector competition on multiple levels, vibrant innovation and massive private sector investment have proven Congress' wisdom in instituting competition policy to replace economic regulation as the best framework to maximize consumer welfare in communications.
- Without the 1996 Telecom Act replacing economic regulation with competition policy, the Internet would be a fraction of the phenomenon it it today.
Thus it is dismaying that Mr. Pearlstein crafted a false choice in his column: "...stick with the competitive, lightly-regulated model and... block a merger... or it could acknowledge... the "telephone" market is a natural oligopoly... and... requires much stronger government regulation."