Re: PFF Agenda [cr-95/9/4]


Sender: •••@••.••• (Glen Raphael)

>          Cyberspace Inc and the Robber Baron Age

The current consensus view of economists is that the 19th century "trusts"
were generally pro-consumer and breaking them up was anti-consumer. Anyone
who still believes that the "Robber Barons" were universally harmful and
that government intervention protected us from them then or now should read
either of the following:

1) The article on "Antitrust", _Fortune Encyclopedia of Economics_, 1992 ed.
2) _The Myth of the Robber Barons_, by Burton Folsom, Jr.

In short, if we allow the big players in telecommunications to compete
freely in an entirely unregulated market, consumers will benefit. History
tells us this, and so should common sense. What is truly dangerous to
consumers is the status quo which legally _prevents_ free competition among
providers. Historically speaking, the ONLY way to get a true monopoly is to
have the government enforce your claim to a territory, and that's just what
is happening now.

>What the manifesto does discuss -- at great length -- is the protection of
>freedoms for _telecommunications & media conglomerates_: freedom to form
>monopolies, freedom to set arbitrary price rates and structures, freedom to
>control content[...]
> This is a formula which harks back to the robber-baron
>capitalism of the late nineteenth century, when railroad, oil, and steel
>monopolies ran roughshod over America's economy and political system.

As long as the government doesn't prevent entry of new competitors, all of
the above will benefit the consumers, JUST AS IT DID in the late ninteenth
century. By all accounts, the way Rockefeller got 80% of the oil market was
by providing a better, higher quality product at a lower price than anyone
else could, using the latest technology to keep pushing the price down
faster. The way Rockefeller's share of the market dropped back to 63%
BEFORE the government broke it up, was that everybody else copied his
techniques and started underbidding him, stealing the market back. This was
a time of fierce competition, the best possible time to be a consumer. It
was a buyer's market. If PFF's changes can really give us that kind of a
market in telecommunications, we should all rejoice! Happy days are here
again! Free at last! :-)

>The main point of the Magna
>Carta, deceptively presented, is an agenda for total deregulation of

If that's true, then I guess I'll have to support it after all. (I was
pretty skeptical of PFF before I read this article)

>Given the multi-billion dollar capital reserves of the phone companies, the
>best business opportunity would presumably be for phone companies to simply
>acquire cable companies, thus establishing total monopolies over wires
>coming into the home.

If building a cable network somewhere guaranteed that the phone company
would buy it from you no matter how much you thought it was worth, then
everybody and his brother would get into the business of building new cable
networks even in places that already had one. In fact, this is exactly what
happened to Rockefeller at one point: he was willing to buy up oil
refineries, so lots of people built new refineries just to take advantage
of him. Eventually the company pursuing the dubious monopoly strategy
described above has more capacity than it can possibly use, and starts
running out of money to buy more. Worse, the overhead of all those
non-productive resources makes it ever easier for a smaller competitor
without such overhead to undercut and steal the market away. It is thus
utterly impossible to establish "total monopolies over wires coming into
the home" by simply buying up wire providers, unless the government
prevents new entry into that market. Accomplishing such a feat would be
much like trying to establish a "total monopoly over food coming into the
home" by buying up supermarkets and restaurants!

(side note: there are quite a few cities which have multiple competing
cable networks that do not share wires. There are even cities (El Paso,
Texas is one) which have multiple competing electricity networks in the
same area. In such places, service prices are lower and consumer
satisfaction higher than in monopoly areas according to _Consumer's
Research_ magazine.)

>Within their
>turfs, they're allowed to be as monopolistic as they can get by with.

Worse, within their turfs they are REQUIRED to be monopolistic. The current
regulatory system grants monopolies over things like local telephone and
local cable. And it grants duopolies in cellular frequencies. If the PFF
gets rid of such restrictions (I don't know if it does), then most such
problems will eventually go away.

Of course no matter what happens wireless and satellite technologies will
probably render the point moot...

Glen Raphael
President, Stanford/Palo Alto Macintosh User's Group
<A HREF="">Home Page</A><BR>

 Posted by --  Andrew Oram  --  •••@••.••• --  Cambridge, Mass., USA
                 Moderator:  CYBER-RIGHTS (CPSR)

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