Editorial: Good regulations take technology into account, lower costs, foster competition, add choices and dispel monopolistic dictatorships

By Dom Serafini

Now, I’ve been calling for regulations in the communications field since President Richard Nixon invented them for television during his term in office, 1969-74. My regulations, though, are always for the good of all the communications industries and have always involved technological advances. To me, deregulation meant artificially slowing down the process of innovation. The fable that a company knows best because it’s guided by market forces is either for naïves or lobbyists. We know that, without specific guidelines, companies will cannibalize innovation by developing competing standards that confuse consumers, slow down market acceptance, create obsolescence and generate losses.

In this case, however, financial losses associated with a product are viewed as marketing ploys by a dominant conglom to drive competition out, not due to the competition’s inferior product, but, rather, because of unsustainable losses.

This brings me to a Los Angeles Times editorial in which the paper attempts to make the case for regulating Internet phones out of the market (“Bad Call on Internet Phone” August 7, 2004).

According to the Times, voice communication over the Internet is a tsunami and “Congress and state legislatures face pressure to regulate what they don’t understand, and their proposals are a muddle.”
The paper went on to say that “The Internet can carry phone conversations at a fraction of the cost of traditional systems....The technology has existed for years, but the spread of high-speed computing led to improvements in voice quality comparable to land lines.”
Then, the pièce de resistance: “It is only because of regulation that we have 911 emergency [national telephone number] services, the TTY [text telephone terminal] machines that allow deaf and hard-of-hearing people to use the telephone, and low-cost lifeline services that guarantee access in rural areas and to low-income households. All these are paid for by required fees and taxes.

Internet telephony threatens to turn that century-old telecom tax structure on end.”
All this can be read as a hymn to corporate giants such as the telephone companies, which make money charging for various distances when, due to technology, such distance-differentiation was eliminated. The call to regulate Internet phones out of the market threatens all that regulation is meant to be. It was different in 1970, when the Financial Interest and Syndication regulation was created to bring new TV companies and innovative programming into the marketplace.

Similarly, the Prime Time Access Rule, in 1975, generated more competition and more options.

Providing low-cost service to rural areas and handicapped people shouldn’t be subsidized by levies, but by technological innovation, spearheaded by good regulation. Wiring the nation for high-speed Internet services is one way to accomplish this social duty. And, like basic services such as national defense, public health and education, this matter should be of State responsibility and finance.

By fostering Internet phones, costs of emergency and other civic services will be so low that there will be no need to call for “low-cost services” any longer.

Now, how does one encourage the development of Internet phones? Simply by developing regulations that support standardization, consumer protection, choices and specific technical requirements! I’m bringing telephony into the discourse as an example of how regulation, especially, for protective reasons, can be as detrimental as deregulation, which hinders competition, innovation and choices.

Dom Serafini