I Love You, You’re Perfect, Now Change

Published November 5, 2013

One of my favorite off-Broadway shows is  “I Love You, You’re Perfect, Now Change.” The show closed in 2008 after running for 12 years and 5003 performances. In a series of unrelated vignettes, the musical comedy delves into the world of dating, love and marriage.

Enough said about Broadway, on or off.

But I’m put in mind of “I Love You, You’re Perfect, Now Change,” in thinking about the newly reconstituted Federal Communications Commission. With Tom Wheeler coming on board this week as the new FCC chairman and Michael O’Rielly as a new commissioner, the Commission will be back up to its full five-member complement.

No, I don’t mean to say I “love” Messrs. Wheeler and O’Rielly. But based on what I know about them, I do respect and admire them for what they’ve already accomplished in their public and private sector lives.

And, no, I don’t mean to say Messrs. Wheeler and O’Rielly are “perfect.” But, as widely acknowledged, they do bring a wealth of experience and expertise concerning communications policymaking to their jobs, and this certainly is a net positive.

But I do mean to say: “Now Change.”

What I mean to suggest by this is that it is an opportune time for a reset of the FCC’s generally pro-regulatory mindset. This pro-regulatory mindset is perhaps not unnatural, given that, from its inception and for many decades thereafter, the markets under the Commission’s regulatory jurisdiction were either monopolistic or tended in that direction.

But that is no longer the case, of course, and this fact is widely, if not universally, acknowledged by public policymakers, scholars, and, importantly, consumers. The fact of the matter is that the transition from narrowband to broadband, from the Analog Age to the Digital Age, has enabled competition to develop in formerly monopolistic markets.

In my oral testimony before the House Subcommittee on Communications and Technology at its October 24 hearing on the “Evolution of Wired Communications Networks,” I stated:

There is no doubt the IP revolution has enabled increasing competition among broadband providers for the provision of voice, high-speed data, and video services, whether these providers offer their services over wireline, cable, wireless, satellite, fiber, or whatever. The relevant point is not that all of the services offered by all of the competitors are perfectly substitutable, or that they all meet every consumer’s desires at all times. The relevant point for policymakers is that, for an increasingly large number of consumers, these various competitors provide a choice of service providers offering a choice of attractive service options.

I suspect that not one of the FCC Commissioners would disagree with the above statement. But the important, more fundamental, point is to grasp the implications for regulatory policy. As I said in my House testimony, in today’s increasingly competitive environment, going forward the FCC needs to rely much more on a free market-oriented paradigm in which “future regulatory activity should be tied closely to findings of demonstrable market failure and actual consumer harm.”

This does not mean there is no place for regulation in the event of market failure and consumer harm. But it does mean that the agency needs to reset its mindset so that it does not look to regulation in the absence of proven market failure and consumer harm.

At this time I want to eschew addressing any specific proceedings. You can find hundreds and hundreds of pieces doing so on our Free State Foundation website and our blog – and rest assured they will keep on coming.

Instead, in closing, I want to say that I have no doubts about the good faith of the new FCC Chairman, or of any of his colleagues. Nevertheless, I do know that, from their high positions, which confer considerable unbridled administrative discretion, it is often easy just to succumb to the bureaucratic imperative to “regulate first,” perhaps with the best of intentions.

As a cautionary warning, I think that what Dean Roscoe Pound had to say around the middle of the last century is very useful for the commissioners to appreciate:

[T]he zeal of administrative agencies to achieve the immediate ends they see before them leads them to see their functions out of focus and to assume that constitutional limitations and guaranteed individual rights must give way before their zealous efforts to achieve what they see as a paramount purpose of government.

And, in the same time frame, F.A. Hayek had this to say in The Constitution of Liberty  about what he called “general regulations of economic activity.” Hayek declared “the economist will remain suspicious and hold that there is a strong presumption against such measures because their over-all cost is almost always underestimated and because one disadvantage in particular – namely the prevention of new developments – can never be fully taken into account.”

With these injunctions in mind, I have no hesitancy, with a nod to off-Broadway, to say to Chairman Wheeler and his colleagues: “I respect you, you have experience and expertise, now change.”

[First published at the Free State Foundation.]