The Four Five 'Net Freedoms

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Accounting for choices in the real world

Two economists are walking along the street and one of them sees a fancy watch in a store window.

"I want that" he says, and the other economist replies:

"Obviously not"

Whatever we say we believe, economics reveals what we really value when we have to make a tradeoff between possible choices.

In this case, we are dealing with a tradeoff between freedom and governance. We have hashed through this particular tradeoff for telecomm several times in the past few decades, remember "Ma Bell", cable provider monopolies, etc?

In each and every case, we have always chosen privatization with some regulation. More importantly, that has proven to be by far the best choice, economically, we are far better off without government sponsored monopolies like the old AT&T.

But if too much governance is anathema, then so is too little. Everything has a cost, including freedoms, and sometimes the cost is too high. We have the freedom to say whatever we want, but the cost of shouting fire in a crowded theater has been deemed too high.

Everyone has the freedom to provide service on the Internet, provided thay can pay the cost.

The question is, how do we decide, as a nation, what that cost is? We have, many times, already made that decision with regard to telecommunications. It is sometimes called "Universal Service" and it says that the cost of certain types of communications are borne by the state.

But not all communications. If you want to start a business, the state is under no obligation to provide you with free advertising time on local media, or pay your phone bill. The cost is determined by competition between providers for your business, and how much you can pay and still stay in business.

If the state deems your business efforts have some value to the states goals, it may defray some of that cost. Thats what tax exemptions and SBA loans are for.

On the other hand, if the state determines that your business efforts detract from some the achievement of the states goals, it may increase your costs. This may range from gas and cigarette taxes to imprisonment and fines for providing child pornography or hate group literature.

The FCC chairman is responsible for determining how the state will respond to the costs of telecommunications. It is an enormous responsibility that affects the lives of all americans and the American economy. Chairman Martins comments reflected these very real responsibilities.

I have been following the community Wi-Fi movement from the start, and I think it is a noble cause that certainly adds value to America's social goals.

But not unqualified value. No society that I know of has ever been able to make a government sponsored entity cost effective, and it is unlikely Wi Fi networks will be the first.

A municipally sponsored community network not only distorts the economics of telecommunications, with all the ramifications, more importantly, there is enoough competition that it can be achieved privately, and those funds applied to the states goals that are not economically feasible in the private sector. America certainly has enough of a backlog of deserving underfunded initiatives that could use the resources.

Posted by: randyjg2@...   Posted on: 08/20/05 You are currently: a Guest | Members login | Terms of Use

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