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WSJ lead article highlights tradeoff of competition vs regulation

The cover story in the Wall Street Journal today "A fight over what you  can do with your cellphone; Handset makers push free features for which carriers pay for" was obviously perfectly-timed and placed by open access/net neutrality proponents trying to influence the Senate Commerce Committee hearing today on the FCC's 700 MHz auction.

  • The article offers a list of complaints for net neutrality supportive Senators to browbeat competitive wireless carriers with.

What the article ignores is the broader and essential context of this issue and debate.

  • What is really going on is a policy battle royale over whether we continue to have a free market Internet and a free market for wireless spectrum or whether the government intervenes and micromanages the Internet and the wireless market with new regulation.
  • This is all about whether special interests, companies like Frontline Wireless, eBay-Skype, or Cyren Call can slip obvious "spectrum earmarks" by Congress and the open legislative process of checks and balances.

Does Congress really want to return to the days when Big Government picked what technologies consumers wanted and which companies won or lost in the marketplace?

  • How soon Congress forgets!
  • Cellular technology was invented in 1960 and it took FCC regulators til the 1980's to allow it to be commercialized!
    • Twenty years in the Government's inbox gathering dust!
  • The wireless market really took off after 1993 when the then Democratic Congress passed a free market spectrum auction bill to choose competition over regulation for wireless.
    • As a result, the US has the single most competitive wireless and wireless broadband market in the world, with more facilities based wireless competitive infrastructure/spectrum than any other country.
  • Remember the absolutely disastrous reign of commercial terror of then FCC Chairman Reed Hundt repeatedly favoring one industry over another with his heavy handed "managed competition" policies, which contributed significantly to the investor and pensioner devastation of the dotcom market crash.
    • Remember, over a trillion dollars of the market crash was the CLECs and fiber backbone companies like WorldCom and Global Crossing which Hundt's "managed competition" policies artificially propped up.
    • Now that the communications sector  has finally recovered from Hundtism, are we really going to give his failed ideas another chance?
      • Does the Congress not remember the old adage:
      • "Fool me once shame on you. Fool me twice shame on me."

The naivete of the current debate is that you can massively intervene in the marketplace for the benefit of a couple of companies and continue to have all the great existing benefits of the free market and competition for consumers.

  • The core question here is do you want the free market to sort out those inevitable tradeoffs, or do you want unelected bureaucrats at the FCC picking what technologies consumers will get at what price and what features?
  • So?