Economic News 1984

1984 September
Clint Bolick _The Freeman_
Regulation of Telecommunications
"A second form of scarcity is 'economic scarcity'...   the theory of 'natural monopoly'.   Some theorists argue that many communications technologies require such intensive capital investments that only one producer may profitably serve a given market.   Ostensibly protecting the citizenry from 'monopoly power', the governmental entity chooses and licenses a single producer as a 'franchisee' or 'common carrier', and then subjects that producer to extensive taxation and regulatory control.   This notion dates at least as far back as 1585, when the British crown awarded monopoly privileges to publishing guilds.   The artificial restriction on the number of publishers facilitated government censorship, but was ultimately undermined by sustained illicit competition.   In America, the concept of economic scarcity was suggested as a rationale for requiring newspapers to publish replies to unfavorable reporting -- an argument the Supreme Court firmly rejected.   But although the Court has opposed even the most 'benign' regulation of newspaper content, it has yet to fully extend this protection to the new media.   It has failed to do so because it asserts that differences in the characteristics of new media justify different degrees of First Amendment protection.   This approach contradicts the teachings of America's founders...   Despite deregulation at the Federal level, regulation of cable in America is increasingly extensive, restraining the full realization of that medium's enormous potential and laying the groundwork for massive state interference with editorial processes traditionally entrusted to private discretion...   Cable is an unnatural monopoly; few companies compete head-to-head only because the system of local franchises and pervasive regulations makes it unprofitable and frequently illegal to do so.   Even without direct competition, however, the existence of alternative technologies provides the ira-portant disciplinary effects of the marketplace, making 'public interest' regulation wholly unnecessary.   Open entry policies and the constant threat of competition would accomplish the same end.   Indeed, some local governments, recognizing that the natural monopoly myth rests on tenuous assumptions, have acted to exclude from their communities not only additional cable companies but competing alternative technologies as well...   Even before the rapid development of the new media, Justice William O. Douglas warned of the dangers involved in abandoning the commitment to First Amendment principles on the basis of technological change: 'The struggle for liberty has been a struggle against government...   [I]t is anathema to the First Amendment to allow government any role of censorship over newspapers, magazines, books, art, music, TV, radio or any other aspect of the press...   My conclusion is that the TV and radio stand in the same protected position as do newspapers and magazines...   for the fear that Madison and Jefferson had of government intrusions is perhaps even more relevant to TV and radio than it is to other like publications.'"
 
 

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