Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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OPEC 2.0

There is an interesting op-ed in today's New York Times by Tim Wu warning of the dangers of allowing one or two large telecoms to control the bandwidth of the internet. He then goes on to argue that reforming the rules for allocating spectrum could enhance the competition the wire-based telecoms face by allowing competitive innovation in the provision of wi-fi service.

While the point about the need for regulatory reform in the way the spectrum is allocated is well-taken, what the piece fails to address is the whole debate over net neutrality and whether the large telecoms should be declared common carriers subject to the fair access rules that govern how truck lines and freight trains operate in the market.

Wu's analogy of the telecom monopoly/duopoly to OPEC is reasonable, but OPEC is an international cartel that is beyond the reach of any particular nation's antitrust laws. AT&T, Verizon and Comcast aren't, and I would hope that with the passing of the Bush administration, our government would get serious about the need to regulate these monopolies. Enhanced competition is obviously a good thing, but given that the telecoms have been successful in preventing cities (Philadelphia comes to mind) from putting up their own public wi-fi services, the playing field would hardly be level even if the FCC managed to come up with a good set of policies for allocating the spectrum. And, given the lobbying clout of the telecoms, my guess is that good publicly-oriented policies won't have much of a chance unless the Justice Department is standing behind the FCC waving the big antitrust stick.


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