In a report in
today's Broadcasting & Cable
entitled, "Susan
Crawford: Country and the FCC at Crisis Point," John Eggerton reports
on Susan Crawford's address at Free Press's National Conference for Media
Reform.
Right now I'm much
more worried about the "crisis" that may be created by North Korea than
anything happening at the FCC. But, be that as it may, I will say this: If
Professor Crawford's ideas were ever to prevail at the FCC, then the country –
if not hurled into a "crisis" – surely would be put in a position which
jeopardizes the country's future economic and social well-being.
Here's why.
According to the
Broadcasting & Cable report, Ms.
Crawford declared, "regulation of infrastructure, government intervention,
makes free markets and free speech possible."
In today's
increasingly competitive, dynamic digital marketplace environment, Professor
Crawford's assertion that government intervention makes possible free markets
and free speech is emphatically wrong. In fact, Professor Crawford has it just
backwards.
To borrow from
Hayek, it is Ms. Crawford's "Fatal
Conceit" – and that of those who share her views – that the
communications marketplace can never be considered competitive "enough"
to forego government intervention. In her view, today's digital Internet providers
should be regulated in the same way electric utilities are regulated. As she
says in her book, "Captive
Audience," for today's broadband Internet providers, "America
needs to move to a utility model." To drive home the point, she harkens
back to the late nineteenth-century public utility regulation of railroads,
which predated, of course, public utility regulation of the electric power
companies.
I wrote a long
piece, "Captive
Audience's Captive Thinking," debunking Professor's Crawford's
theories. I am not going to repeat here all that I said in that piece. But I
hope you will read the piece in its entirety if you missed it before.
Here is the
essence of the way I explained Ms. Crawford's "fatal conceit" regarding
her misunderstanding of the current marketplace:
"In support of her claim that cable already has
'decisively' won the battle, Professor Crawford engages in a bit of sleight of
hand. This is because her claim is based entirely on substantially narrowing
the market definition by defining the relevant market – and this is buried in a
footnote [page 284, note 3] – as 'cable companies with DOCSIS 3.0-enabled
infrastructure that can offer very high peak download speeds.' In
other words, in the few places where Professor Crawford addresses market power
and market definition in any serious way, she distinguishes, albeit very subtly,
between 'high-speed' and 'very high peak download speed' broadband services.
The latter only includes services with speeds above 100 Mbps. In other places,
she distinguishes between high-speed wired broadband and what she calls 'truly'
high-speed broadband.
The problem with this approach is that it doesn't reflect
present marketplace reality. Even though Professor Crawford may think
otherwise, for most consumers, telephone company-provided high-speed broadband
services provide a satisfactory alternative to those of cable operators, even
in areas in which fiber technology is not employed. Many consumers consider the
broadband service provided by satellite operators a satisfactory alternative to
cable broadband. And still other consumers consider wireless broadband services
not only complementary to cable (as Professor Crawford maintains), but
substitutable as well. This is increasingly so as high-speed 4G wireless
services become more ubiquitous.
Indeed, over 80% of American households have access to at least
two high-speed wireline providers consistent with the FCC's definition of
high-speed, even if one does not provide service, at peak times, at the 'truly'
or 'very' high-speed above-100 Mbps that Professor Crawford insists on
employing for market-defining purposes.
So, the problem with Professor Crawford's claim of cable
monopoly power is that it rests on a hypothesized marketplace based on an
unduly restrictive market definition, not on the broadband market as it
presently exists. Her hypothesized market definition is based on her own
personal predilections concerning the level of service she thinks she will
demand in the future, rather than on an analysis of the services consumers
demand in today's actual marketplace. Note that she does not report that when
the FCC last surveyed consumers, the agency found that 93% were satisfied with
their broadband service. And note also that right at the outset of her book [on
page 2] she predicates her assertion of Comcast's dominance on the level of
service that she hypothesizes will be sufficient to satisfy Americans 'in the
near future,' without explaining what that means."
Sad to say, I am very doubtful that any amount of evidence whatever
would sway Professor Crawford from her view – apparently still being peddled as
well at the Free Press conference by former FCC Commissioner Michael Copps –
that the digital broadband marketplace is monopolized. I do find it ironic
that, even as I write this, there is a yet another
story featured in today's Washington Post
to the effect that a growing number of viewers watch whatever video programming
they watch – solely – over the
Internet, and, yes, over their smartphones.
It is completely fallacious, of course, to assert, as Ms.
Crawford does, that more government intervention makes possible "free
markets" or "free speech." It is one thing to recognize – as I
do – that in cases of demonstrated market failure, there is a role for
government regulation to play in protecting consumers. It is another case
altogether to think that, in the current increasingly competitive, dynamic broadband
Internet marketplace, government intervention makes possible a free market.
Such intervention, especially along the lines of imposition of the
"utility model" recommended by Ms. Crawford, is completely at odds
with a free market. Simply put, absent market failure, the way to promote consumer
welfare and incentivize economic growth is too rely on free market principles.
Finally, and as importantly, as I have so
many times in the past, this must be said yet once again: Ms. Crawford's
notion, shared by Mr. Copps, that government intervention and regulation of
broadband Internet providers makes possible "free speech" is exactly
backwards – and dangerous too. The First Amendment's free speech guarantee is
intended to protect private persons and entities from government interference
with their speech – not to authorize government intervention curtailing speech under
the guise of some government official's notion of ensuring of "fairness"
or "non-discrimination."
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