If Net Regulation Is Bad, Why Push for It?

Tim Wu makes an extremely interesting, and telling, point in his provocative Wall Street Journal essay, “In the Grip of the New Monopolists.” He writes:

“Today, Verizon and AT&T’s dominance of wireless phone service can be credited in part to de facto assistance from the U.S., and consequently their niche is probably the safest in the entire industry. Monopolies may be a natural development, but the most enduring ones are usually state-sponsored. All the more so since no one has ever conceived a better way of scotching competitors than to make them comply with complex federal regulation.”

Although I disagree with a great deal of Wu’s argument–as Adam Thierer points out, his piece depends heavily on a Humpty Dumpty-like redefinition of “monopoly”– this point is right on. I have been arguing for some time that the main beneficiaries of reclassifying internet services under Title II of the Communications Act would be the incumbents, particularly Verizon and AT&T. These are companies that have spent decades dealing with the intricacies of Title II common carrier regulation and they understand the rules better than anyone else, probably including the Federal Communications Commission. And understanding the rules is the first step to using them to promote your own interests.

This, of course, raises the question of  why Wu and his ideological soulmates are so anxious to see complex regulations imposed in the name of network neutrality. Unlike others of a more libertarian bent, I support regulatory intervention to remedy market failures. But no one has established market failure as a grounds for reclassification; if you look closely at advocates arguments, they are limited exclusively to bad things that might happen in the future. (There’s a better argument for market failure in the case of broadband availability and pricing, but that’s a different issue.)

AT&T and Verizon are vociferously opposed to reclassification, but the fact is that it is a briar patch for them. Fortunately, the election results have pushed the issue to the back burner. We shouldn’t do the incumbent carriers the favor of throwing them in.


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