NY Law, U.S. Chamber of Commerce Living in the Past

Carl Weinschenk

The description in this CNET piece and the study upon which it reports leads me to believe that the folks at the U.S. Chamber of Commerce and NYU Law School aren't reading the papers or their history books too closely.


The report, which was written for the Chamber by the Advanced Communications Law & Policy Institute at New York Law School, argues that investments in broadband networks should continue without Net Neutrality and with minimal federal requirements. The idea is that cable, telephone and other companies, left on their own, will create a broadband infrastructure capable of providing all the bandwidth and advanced services required by the business, consumer, educational and medical sectors.


There are a couple of problems with this. The first is that the cable and telephone companies have, to date, done a mediocre job. It is well established that the United States is falling behind in comparison to other nations. IT Business Edge bloggers have written about this extensively this year. The report highlights the fact that our telecommunications infrastructure is more robust and has more bandwidth than in the past. Time passes, and networks evolve no matter what regulatory regime they labor under. It's like saying a 10th grader knows more than a 3rd grader. What's important is how each stacks up compared to his or her classmates. We no longer are at the head of the class.


By all accounts, our infrastructure is not keeping up with other nations'. The Chamber and ACLP should address the relationship between the regulatory environment of the past eight years and that reality, instead of reflectively singing the praises of our current wired infrastructure, which is fine if you don't happen to live in Wyoming or Nebraska.


The other problem is the chronic mistake-one that isn't always innocent-of assuming that what's good for Comcast and Verizon is good for consumers. It isn't. Public companies have a fiduciary responsibility to shareholders to do what is good for the corporation. That is not the same as doing what is good for me, if I am not a shareholder of that company. The extent that companies are required to act in the public good comes from what is imposed upon them by the government, which is precisely the kind of requirement the Chamber wants to limit.


This is not theoretic or academic. While it is not exactly apples to apples, the general tendency of business to pull every string possible to get the government out of its hair -- and the fact that the Bush Administration shared the same philosophy -- was an integral part of the sub-prime mess, the financial services sector mess, the auto company mess, the Bernard Madoff mess and whatever other messes the new year brings.


Of course, which way the government goes on the contentious topic of Net Neutrality or imposes requirements on carriers isn't the same thing as having a regulatory and legal environment prone to the kinds of catastrophes we've lived through this year. The mindset is the same, however. There is a lot of history here, dating back to the Johnson Administration's poorly executed War on Poverty and the reaction that fully blossomed a decade later when Ronald Reagan became president and made free market economics an article of faith.


The Bush Administration has redoubled that effort. The underpinnings of those efforts seems predicated on tired thinking that government intervention or close oversight is by definition a bad thing that will do nothing but stifle innovation, choke investment and throttle small businesses. If employed correctly, things will work out differently. In any case, there are a lot of people looking at the remnants of their 401k accounts and moving their belongings into storage facilities who probably are thinking, in retrospect, that a bit of government meddling isn't such a a bad thing after all.


We are at a key moment, of course. President Elect Obama has made broadband a bullet point-if not a key element-of his recovery plan. At the same time, technology is evolving at a blistering pace. The bottom line is that a lot of money will be spent. The Chamber and its members should be quite happy that it is. However, the thought that it should be done without tremendous oversight and tight stipulations is as antiquated as thinking that Wall Street can police itself or blindly throwing billions of dollars at poverty will magically end it.

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