Congress’ Naivete Costing Us Plenty
I realize that “told you so” is an annoying and unproductive contribution to any discussion, but really …
In the January issue of Telecommunications magazine, Sen. John McCain, who at least has the class to admit to a major foul-up when he sees one, writes of the 1996 Telecommunications Act: “Sadly, at least in the short run, it does not appear that the act is living up to the generous promises that its backers made only two years ago. The lower rates, better service and increased competition has instead been translated into high rates and increased consolidation among big industry players.”
Duh. May I gently suggest to McCain and his colleagues that such results are to be expected when they allow the industry under question to write its own deregulation bill?
As we approach the second anniversary of the Telecom Act of ‘96, passed by a Republican Congress at the height of its hubris, the consequences that were (forgive me) easily foreseeable have now come to pass. The profoundly silly notion that deregulation will solve all problems - pushed for years by the free-marketeers of the Chicago school of economics - had come to be conventional wisdom among Republicans, who are, in my opinion, far too gullible about simple solutions.
“As the anniversary of the 1996 Telecommunications Act approaches, it’s becoming painfully obvious the Congress needs to take another look at the historic legislation.” - Business Week.
“Amid growing complaints about cyberporn, high cable-TV rates and lackluster telephone competition, a federal judge rang out the old year by throwing telecom reform another curve, one that could spark Congress to revisit the Telecommunications Act.” - Newark StarLedger.
“In a disclosure certain to provoke calls for stiffer regulation of the nation’s cable television operators, the Federal Communications Commission on Tuesday issued a report showing that cable TV rates have been rising nearly four times faster than inflation.” - Los Angeles Times.
And so forth. Perhaps the most ironic aspect of the Telecom Act is that its consequences would be even worse than they are had it not been for “activist” federal judges, who have been ruling against it energetically. As Judge Jerry Buchmeyer once said of another lousy law: “It should not be tossed aside lightly: it should be thrown out with great force.”
The Wall Street Journal points out that last year, the 8th Circuit Court of Appeals overturned the Federal Communications Commission’s most important rules for implementing competition under the ‘96 act. The judges ruled that the “interconnection” requirements were so complex that they slowed the move toward competition. On New Year’s Day, Judge Joe Kendall of Wichita Falls, Texas, declared unconstitutional those provisions of the act that bar local Bell companies’ entry into long-distance service until the Bells pass a tortuous set of regulatory hurdles.
This may sound like courts-against-regulators, but keep in mind that the Telecom Act was written in its entirety by the telecom industry, and in the long history of bidness coming to government to demand regulation (or as they called it in this case, “deregulation”), increasing competition has never been their goal. I know this stands on its head the right-wing notion that an interfering government is forever imposing unwanted regulations on bidness, but anyone who has ever covered a legislature knows what a crock of hooey that is. In the case of the Telecom Act of ‘96, the reality was unusually clear. Campaign donations by the telecom industry to the legislators who “wrote” the law were simply staggering, as I reported at the time.
The Supreme Court announced just this week that it will speed up its consideration of the dispute over how to open the $100 billion local phone market to long-distance companies. The justices will consider three related appeals - by the Clinton administration, AT&T and MCI - at their closed-door conference on Jan. 23.
Deregulation continues to bear strange fruit in other fields as well; according to The New York Times, business travelers are continuing to pay increasingly higher air fares, with the price of a domestic round-trip coach ticket on at least one route surpassing $2,000 for the first time. Air fares for business travelers have climbed nearly 40 percent in the last two years. And as has been reported elsewhere, one consequence of airline dereg is that many smaller cities no longer have any air service at all.
The lesson here is not that government regulation of business is intrinsically good or intrinsically bad. The lesson is that if and when regulation is necessary for the public good, it is best done by legislators who have thoroughly studied the issues so they can see where the public good lies. It is not advisable to have the regs written by blind ideologues acting under the influence of huge campaign contributions from the very industries covered by the law.
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