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
