(Fred Weinberg) – As many people know, we have a comparatively large investment in the radio business and, as a result, I have been deluged with questions from readers and listeners about the Federal Communications Commission’s latest attempt to ignore the courts and Congress and to try and regulate the internet.
The concept was that it is the government’s role to regulate something which has created billions of wealth without any regulation whatsoever to date.
Just look what a great job they’ve done on broadcasting. Not.
The FCC was put into place in 1934 because back then, the technology was such that you could not put two 50,000watt radio stations in the same town on the same frequency. Somebody had to decide who the winners and losers would be because, back then, we thought that spectrum was a scarce resource.
When I was going to college, the engineers I worked with used to laughingly tell us that you could not repeal the laws of physics. Well, upon further consideration, not only have those laws been repealed but the winners from 1934 have become losers in many cases, run over by the freight train of technology.
Yet the FCC soldiers on.
Back when we considered the airwaves “scarce” and “owned” by the public, the FCC was charged with being the traffic cop and allocating their use.
Today, we’ve shoehorned so many broadcast frequencies into the spectrum (many times in the name of diversity) that in many large cities, two thirds or more of the broadcasters are losing money and watching a radio or television company go into bankruptcy is not unusual.
OK, I get that. We’ve adjusted our business model to stay in smaller markets where folks appreciate their local radio stations and appreciate those who serve the community—things which can no longer be done when you have 65 competitors in Las Vegas or Phoenix. And let me make it clear that my complaint here is not the competition but the Government’s heavy thumb on the scale.
So the internet is now a new frontier.
It allows amazing things to happen. In many cases amazing things for which there is not yet a commercial market.
The way new things take off in business is that you let them alone to grow and prosper.
The FCC has a different idea. It wants to make sure that big rich companies who are successful can’t pay a broadband provider a little extra to carry their content at higher speeds. Perhaps Netflix or Hulu which charge a monthly subscription fee. Or, keeping in mind that most big, rich companies started out in someone’s garage with an idea, Google, Apple and Amazon. They also seem to have the warped idea that crap from Wikileaks should have the same privileges because, well, they exist. They call that by the innocuous name of “net-neutrality”, which is anything but.
So despite a court decision saying that a similar set of regulations was not legal and despite a bi-partisan majority of Congress refusing to make such regulations legal, the Obama appointees on the Commission (elections do have consequences and there are three Democrats on the five member Commission) rammed this through—sort of like Obamacare.
Here’s what is going to happen.
If, somehow, the courts allow this to stand, you will begin to see private networks develop that you can buy your way into from your house. Those networks will compete with each other for customers but they will probably balkanize the internet because they will be run strictly for commercial purposes.
We might even go back to the days when you were an AOL or a Compuserve or a Prodigy subscriber (or in our case all three).
Now that might not be a bad thing in and of itself.
But right now, the internet works without the ham-handed regulation that the FCC is trying to impose. Why create a whole new bureaucracy to solve a problem that does not exist?
Furthermore, despite what people who don’t own it are fond of telling you, information is not free. It costs real money to collect information and to distribute it. If there is no real business model for paying for that information than you end up with a situation where two thirds of the radio and TV stations in large markets are eventually going to disappear because they will be broke.
Please don’t misunderstand. I’m not for government intervention to save radio and tv broadcasting, either. Just pointing out that the last time the government got involved, they ended up creating a business model that will no longer work. And they want to keep it that way.
It’s time for Congress to remove the FCC from the regulatory scene. Or at least to make it clear that its job is strictly to be an engineering traffic cop. We no longer need a bureaucracy which decides winners and losers. Spectrum is no longer a “scarce” resource. Neither is a wireline network.
Success in business requires profitability. Profitability requires a minimum of regulation.
That is the opposite of what the Obama FCC is trying to ram down our throats.
And that applies to healthcare and automobile manufacturers as well.
(Mr. Weinberg is publisher of the Penny Press)