What Would Europe Do?
posted by Frank Pasquale
I went to a few trying panels at the annual law prof conference, but overall I felt presentations in my fields were great. (Perhaps it’s just like Congress–people hate the institution but love their own representative). My two favorite panels were on the internet & telecommunications, and on health insurance. But I felt the latter was ultimately more satisfying than the former, largely because many of the health scholars were deeply aware of comparative health policy, but the internet/telephony panel focused very tightly on U.S. policies.
That’s not to say the internet/telephony panel was at all bad–many big names in the field were there, they directly argued with one another, and a high-level senate staffer injected some political realism into what could have become a speculative discussion. Perhaps the most compelling arguments for the status quo (as opposed to “net neutrality intervention“) were offered by Christopher Yoo, who put forward a quasi-Gilderian vision of Darwinian competition unleashing quantum advances in communication services. For example, Yoo said it would be foolish for the FCC to protect Google from “gouging” by broadband networks, since the danger of such discrimination might just drive Google to massively invest in a satellite network to provide a third alternative to the the telephone/cable duopoly. Some would say it’s that duopoly that’s largely responsible for the US’s pathetic ranking of 21st in the world (right behind Estonia) in broadband penetration.
That makes a lot of sense as far as it goes, and reminds me generally of Schumpeterian visions of innovation–let monopolies rack up rents so they’ll either use profits to innovate or provoke someone else to swipe their customers. But another, gentler vision animates some European policy on the matter, where most customers get much lower prices for much faster services than Americans do.
As this fascinating On the Media segment reports, in the UK, by regulation, there is a separation between network providers and internet service providers. Working from this model, the Boston Wireless Task Force plans to develop a separate nonprofit network for the city, which will in turn let ISP’s use the network at a low rate. The mixed public/private model promises to provide basic infrastructure (incredibly important in a city where 80% of public school children lack broadband access), but will let the market experiment with different models of service provision.
Of course, if there’s one thing I learned from the Internet/telephony panel, it’s that the technical complexity of this issue may well defeat the efforts of even the best-intentioned regulators. But if I can indulge a football analogy, I have the nagging sense that some US deregulatory policy here is based on a “long ball” strategy, a heady brew of techno-optimism and market theology more based on Hayek hagiography than real policy analysis. Perhaps nondiscrimination rules and even reasonable rate of return regulation for network operators may just be the “three yards & a cloud of dust” underdog America needs to advance to the top 20 in world internet rankings.
PS: Michael Carrier’s work on patent and antitrust inspired the “Schumpeter” point above–that was presented at another fascinating panel, on IP and Antitrust, on Saturday. Carrier advances Kenneth Arrow’s rival position that innovation is better driven by competition than monopoly.
Photo Credit: Niall/Flickr, Municipal Wi-Fi Router.
January 9, 2007 at 9:28 am
Posted in: Economic Analysis of Law, Health Law, Intellectual Property, Technology
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Responses (2)
Jack S. - January 9, 2007 at 2:12 pm
What would Europe do? Well they certainly wouldn’t allow the monopolists to choose the direction of the network for starters. The US has chosen exactly the opposite approach and has failed miserably.
There’s no mystery as to what works and what doesn’t, yet the FCC has maintained it’s blinders and forges ahead on a ridiculous strategy. Commissioners Copps and Adelstein seem to be the only ones who have a clue about the market realities. Tate is a joke, daring calling the US internet market as subject to “fierce competition”. Partisan? the sad reality is probably yes. Herein lies another difference between the US and Europe. European regulatory authorities operate on well founded antitrust doctrines. FCC regulators operate on partisan lines.
I can only imagine what the panel must have been like to listen to the big cable and telco pundits. Who are they trying to kid?
Maryland Conservatarian - January 10, 2007 at 2:40 pm
“Perhaps nondiscrimination rules and even reasonable rate of return regulation for network operators may just be the “three yards & a cloud of dust” underdog America needs to advance to the top 20 in world internet rankings.”
…maybe for law professors who stress out over “top Tier” status et al, this kind of ranking seems important but I just don’t/can’t care that much that someone ranks Estonia above us in some matter. I certainly wouldn’t want to use that (ever) as an excuse to implement government policy. After all, years ago academics and our government preached Keynes instead of Schumpeter. Why trust them to be right this time?
“the best-intentioned regulators.” – Ha! good one…
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