roundtable: "Huber's fantasy world about telecommunications and the FCC"

roundtable: "Huber's fantasy world about telecommunications and the FCC"

"Huber's fantasy world about telecommunications and the FCC"

W. Curtiss Priest (BMSLIB@mitvma.mit.edu)
Wed, 31 May 95 08:22:53 EDT 

Message-Id: <9505311224.AA00649@a.cni.org>
Date:         Wed, 31 May 95 08:22:53 EDT
From: "W. Curtiss Priest" <BMSLIB@mitvma.mit.edu>
Subject:      "Huber's fantasy world about telecommunications and the FCC"
To: Telecommunications Policy Roundtable <ROUNDTABLE@CNI.ORG>


Conservative Group urges replacing FCC with less powerful agency

June 1, 1995
CITS Observations on attached article:
W. Curtiss Priest

The year 1934 was a long time ago.  Anyone with substantial knowledge
of what telecommunications was like prior to the Communications Act
would be about ninety years old, today.

There are those of us who appreciate the need for a commission of
national scope that is sophisticated enough to deal with complex
issues and does not require the burden of petitioning a state or
national court to redress communication imbalances and the
"public interest."

Can we really believe Pete Huber when he says we can "expect and rely 
on competitive forces to take care of irate" consumer interests?

Yet Huber clearly believes the market will do this.  I've met this
type of person.  They are of the same mentality as those who said
we didn't need laws to protect coal-miners from black lung disease
and laws to protect the elderly from slippery bathtubs!

They live in their own myopic world and from that myopic vision
they would destroy the years of work that went into passing
telecommunications laws.

Let me bring this home.  To take advantage of MCI's 50% savings
on long distance calls, I now have to push buttons everytime I
want to make a call.  And sometimes I make calls on the wrong line,
increasing my local charges.  And weekly I get checks from AT&T
to change my service, and I spend hours calling Sprint and MCI
to get "matching deals" to save $20 or so.  The latest wrinkle is
that I now have a coupon from MCI that grows in value by $5 for
every month I don't switch from their service.

This is the result of competition -- confusion and unwanted choices.
Is long distance service a "natural monopoly"?  You bet it is --
watch how AT&T's market share has been slowly increasing, year-by-year!

I estimate it will be about 6-8 years before we will have to
re-regulate long distance phone rates.  We economists call it
economies of scale.  The bigger you are, the cheaper you can perform
the service!

Did the interim period of deregulation help?  Perhaps.  That will be
a good one for the historians to figure out.

But this is today, and there are many of us who see there are
not only economies of scale, but "economies of scope."  This means
it is cheaper to be both producer of media and distributor of media.
And now we are at the door of "cross-ownership" issues.

And, let us not forget, that Microsoft has gained substantial market
share by having "proprietary" operating systems like Windows.

And at the last minute the interoperability language in H.R. 1555
was gutted, surely, by someone on the Commerce committee responding
to Microsoft's glee to have proprietary systems so they could get
even bigger.  And so that little guys can't provide competing
pieces of the oncoming mega-telecommunications complex that
Microsoft and AT&T are devising.

Peter -- go back to Samuelson and look up "economies of scale
and scope."  Read about natural monopolies.  Then come back
and tell me this "story" again.

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****************************Advertisement********************************
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****************************Advertisement********************************
Conservative Group urges replacing FCC with less powerful agency
ASSOCIATED PRESS

WASHINGTON - The agency that regu-
lates Americans' access to television, tele-
phones and other communications services
should be replaced by one with sharply re-
duced powers, a conservative group with ties
to House Speaker Newt Gingrich urges.

Under a plan unveiled yesterday by the
Progress and Freedom Foundation, most of
the Federal Communications Commission's
duties would be left to federal courts and state
regulators.

- The agency replacing the FCC would have
one main responsibility: to collect technical in-
formation to help federal courts resolve dis-
putes among companies over airwaves inter-
ference, said Jay Keyworth, chairman of the
Washington-based foundation.

The foundation paid for the development
and production of Gingrich's televised college
course and has received donations from cable
and telephone companies.

Among the FCC's duties are licensing TV
and radio broadcasters, overseeing long-dis-
tance services and regulating cable rates.

And under the 19:34 law that gave birth to
the modern FCC, Congress empowered the in-
dependent agency to protect and to serve the
"public interest."

Because of this, people who think they have
paid too much for long-distance or cable ser-
vice can complain to the FCC. Those who be-
lieve a local broadcaster neglects a community
can raise concerns with the commission.

Under the Progress and Freedom Founda-
tion's plan, people or companies would take
their problems to district courts, state regula-
tors or to the Justice Department.

The new agency would not get involved in
consumers' affairs.

The foundation would "expect and rely on
competitive forces to take care of irate" con-
sumers, said Peter Huber, a lawyer involved in
the foundation's project.

FCC Chairman Reed Hundt is a big advo-
cate of competition, but wary about it being
the sole protector of the public.

"It is absolutely wrong to say there is no
public interest stake in the communications
revolution and saying that the private sector
can handle it all," Hundt said.

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