For the past couple of days, I've been in South Korea, attending the OECD's Ministerial on the Future of the Internet Economy. Rather than try to give a blow-by-blow account, I've tried to package some of my thoughts in a series of posts. Here's one:
Something bothered me about what Vincent van Quickenborne, Belgium's Secretary of State for Administrative Reform, was saying, even though I agreed with his main points. In a panel on Tuesday discussing telecommunications convergence, he was saying that the Internet disrupts protectionism, favoring competition, and also that more competition should be encouraged. He noted that Belgium, with a broadband duopoly, provided “only” 10 Mbps broadband for the fairly high price of 40 Euros. In contrast, France, where there are at least three major providers, he said, a triple-play package would cost only 30 Euros. Korea, taking a step further, could provider up to 100 Mbps for about 20 Euros, he said.
All of that is consonant with what we've been seeing here at PK—that competition drives down prices and helps broadband penetration. What bothered me was the next step he took with his reasoning—that all this could be achieved through less regulation.
That's a major theme that was taken up by FCC Chairman Kevin Martin earlier in the day. In a plenary address to the assembled ministers and attendees, he stressed both the need to preserve the open character of the Internet, and to encourage its growth through deregulation. “Competition, not regulation,” he said, “delivers the benefits of choice, innovation, and affordability.” He noted the various deregulatory decisions he's made during his tenure, including streamlining the franchise process, and removing tariffs, price controls, and unbundling requirements. These practices, he said, were regulatory obstacles that slowed deployment.
Yet in reciting a list of his past supposedly deregulatory successes, Martin also cited banning exclusivity contracts between telecom providers and apartment buildings—so that residents of a building wouldn't be locked in to a particular provider due to contracts decided between the building and the provider beforehand. Martin also cited the conditions placed on the upper band of the C block of the 700 MHz auction, noting that the winners had to keep the spectrum open to third-party devices and applications.
The funny thing about these last two initiatives is that they are affirmative regulations, and contrary to an extreme laissez-faire economics that is too often tied to talk of “deregulation.” Yet these initiatives are requiring businesses to restrict their freedom of contract and limit what they can do with their property. And they result in a net benefit.
Why? Because while they are regulations, they're pro-competition regulations. There may be a reflex to equate deregulation with competition, but that equation only works when the regulations either allow or even enforce the market power of incumbents. The entire field of antitrust law, after all, is a set of government actions to enhance competition. Good telecom policy should be no different.
Another one of the many plenary speakers was Josh Silverman, president of Skype. Towards the end of his speech, he emphasized that there were two major principles that should inform Internet policy: competition and consumer protection. Like both Martin, Quickenborne, and a whole host of other speakers, he praised competition as driving innovation. But, he emphasized, this needs to be accompanied by protections for consumers—against fraud, privacy violations, and other issues. In a market dominated by large incumbents, I don't think it's much of a stretch to think that anticompetitive behavior is one of those other issues that requires regulations for consumer protection. Competition and regulation aren't opposed to each other—while we should always be wary of excessive regulation, sometimes it's the best way to protect the market of innovation, and the consumers that market serves.