Telecommunications in Jericho
This essay, written three years before the enactment of the Telecommunications Act of 1996, is a reminder of how little has been accomplished in deregulating telecommunications. In 1993, I erroneously predicted that American telecommunications regulation was about to collapse like the walls of Jericho. The industries that we are accustomed to calling telephony, broadcasting, cable television, and mobile communications have acquired, and for the time being retain, their distinct identities principally because regulatory walls have segmented the market and limited the ability of firms to expand beyond their industry’s designated territory. This regulatory segmentation cannot endure. It has become cliche to say that disparate technologies are converging in the sense that they permit us to transmit a particular message, whether it is a voice or a stream of data or a video image, by any one of several different means.
Whatever the original purposes of federal telecommunications regulation in 1934, 1927, and earlier, we must now ask some searching questions: Does federal telecommunications regulation impede competition; indeed, has that become its principal (if unstated) function? Does regulation impair the access of American consumers to new communications technologies? Does it inhibit the dissemination of ideas and information through the electronic media? Does the current licensing regime for electromagnetic spectrum fail to allocate that resource to its most productive uses? If telecommunications regulation is producing any of these deleterious effects, what are the costs and what can and should be done? These questions have such large implications for American economic performance and social welfare that their scope is routinely measured in tens of billions of dollars.