What's wrong with this picture?

Sep 6, 2002 12:00 PM, Peter Bernstein

Please accept my apology in advance. I make it a rule not to repeat myself on a specific subject more than once a year. However, events have conspired to create an exception that cries out for amplification. Thus, my annual tirade on why the Federal Communications Commission should mandate 100M interactive digital service from a primary broadband carrier (cable or telco, depending upon who the customer selects) as basic "universal" service is going to be biannual this year.

Have I lost my mind? Has someone else lost his or hers? What's the occasion for such a momentous decision? 

In order, the answers are: 

• I've lost my patience, not my mind.

• The FCC commissioners have lost their minds, assuming one credits them the ability to act rationally and in the best interests of the public.

• This was occasioned by two significant events:

1. A need to replace a dying big screen TV, and an inability to discern what to buy.

2. The closely related FCC decision this past month to mandate to TV manufacturers as to when they must offer digital tuners for over-the-air programming.   

What does this have to do with telecommunications?  For starters, how about "E"verything.

Let's start with the acknowledgement that we have proof the lunatics are running the asylum. The FCC's decision to force television manufacturers to make digital TVs by 2007, or else, is the proof. The "or else" is that the manufacturers will become subjects of stiff penalties. The "or else" for us who watch television--instead of print money from making them or running content through them--is that we must buy new digital TV (DTV) "tuners," or else we will not be able to watch an increasingly large number (ultimately all) over-the-air TV programs.  

By some estimates, these "tuners" could add $250 to the cost of a television despite the fact that nobody seems to care about DTV except videophiles. In fact, the reason the FCC has been forced to mandate the use of such tuners is because so few of us care to use them right now. Hence, they are going to make us. Their answer about the cost of these things is that we should not worry because prices are falling.

By the way, they are going to make us because the FCC wants to take back the radio frequencies used by channels 60-69. Part of the radio spectrum will be for use by public safety services. There will be an auction for the rest for new wireless services. The FCC, probably to insure we know they are less than rational, can't explain the efficacy of auctions as the optimal tool for promoting the public good and getting a return on a scarce public resource, since they gave existing broadcasters digital frequencies for free. 

Yet, all of this is merely inane public policy from an agency that caters to the interests of the powerful broadcasters yet professes to be in favor of market forces dictating technology preferences, and creating level playing fields in what should be competitive markets. The real insanity is that the FCC refuses to apply the same logic--mandating things deemed to be in the public interest that the free market can't correct on its own--to an industry with real problems where real public good could flow: telecommunications.  

It has been well documented that the hand of the free market is accelerating the United State's descent into a third-world country when it comes to the use of interactive broadband communications by average citizens. It is also not a secret that the only public policy recommendation we have to correct this is proposed legislation to enable the incumbent telephone and cable companies--that's right, the same ones who keep cutting their budgets and have spent decades not providing residences with digital services--more regulatory flexibility to not deploy next-generation networking to our homes unless they feel threatened by a competitor. 

If we can mandate what TV consumers must buy in order to be entertained, why can't we mandate that the entities who have been granted government sanctioned franchises live up to their responsibilities to provide universal, state-of-the-art communications services at reasonable rates?

In fact, if we can't get the companies we rather tightly regulate to do what is clearly in the national interest--deploy interactive broadband communications services to every subscriber in their franchise area in an expedition manner on reasonable terms--why regulate them at all? Maybe we should auction off the facilities that give us utility, phone and cable services to the highest bidders if the current companies don't feel up to the job. Now that would be an auction. 

The FCC could televise it. Better yet, why not make it pay per view.

What's wrong with this picture?  As stated above "E"verything.

Peter Bernstein is President of Infonautics Consulting, Inc. He can be reached at pb111451@optonline.net.