The Bad Idea Behind the FCC’s Intrusive, Coercive Regulatory Agenda

Published November 30, 2007

National Review Online has just published an interesting article praising FCC Chairman Kevin Martin. The thrust of the piece is that Martin, a Republican, has been better than a Democrat appointee would have been. That’s probably true, just as President George W. Bush’s compassionate conservatism is at least marginally better than the opposing party’s coercive progressivism–but just as with the president’s agenda, “better than the main alternative” definitely does not mean “good.”

The article’s authors, Cesar V. Conda and Lawrence J. Spivak, make a reasonably good case for the proposition that Martin does indeed favor markets in general, at least in the abstract, and they make the following argument:

“Some free-market advocates are grumbling that the Federal Communications Commission under Kevin J. Martin has not held true to conservative principles, in particular in regard to broadband technology. They are wrong. Martin’s tenure as chairman of the FCC has been characterized by a consistent pro-entry/pro-consumer-welfare mandate, the very hallmark of economic conservatism.

“Martin understands all too well that because telecommunications is a very expensive business and entry barriers remain high, responsible policy must provide an environment where firms have the incentive to invest and compete. For example, while Martin has adhered to the philosophy that there should be ‘competition first, then deregulation,’ he also has recognized that legacy regulation (or regulations now on the books) can act as a barrier to effective competition and investment. For these reasons he has long espoused the notion that firms should be able to ‘invest their way out of regulation.’ “

I am one of those free-market advocates who have “grumbled” about Martin. I agree Martin is better than a Democrat FCC chairman probably would be, from a market perspective, but that is not much of an accomplishment. The key problem is, as the authors write, “Martin has adhered to the philosophy that there should be ‘competition first, then deregulation.’ “

Surely Martin knows that deregulation in itself enables increased competition. Yet he has moved to impose much greater regulation on the cable industry under the guise of creating more competition. Martin proposes to force cablers to charge customers on an “a la carte” basis rather than offer discounted packages of programming. He also wants to require cable providers to discriminate on the basis of race and sex in selling the analog space that is being vacated as programmers move to digital.

Martin says that this is all intended to “promote diversity of information sources,” but the actual effect would be to give cable customers fewer programs for more money, and to mandate racism and sexism, as Dave Kopel of the Independence Institute notes.

Fortunately, Martin had to postpone his scheme yesterday because the legal rationale by which he hoped to impose it was widely denounced as a fraud (see the last four paragraphs of the linked article). But he will return with it, you can be sure, because it does indeed fit his approach of “competition first, then deregulation.”

Martin’s desire to have the federal government micromanage cable television packaging is a direct outcome of his “competition first” approach and fully exposes the amount of authority to meddle such a notion gives the FCC or any other government agency.

Here’s an alternative principle for you: The role of government is not to “promote competition” or any other such thing; it is to ensure that people and organizations do not do actual, observable harm to others. And the federal government’s role in regulating interstate commerce is first and foremost to ensure that the states don’t interfere in the market of providing goods and services across state lines. None of that is expressed in the idea of “competition first, then deregulation” or in Martin’s plans to stifle innovation in the cable television industry at the very time when it is facing its strongest ever competition from other distribution media.

This is simply Big Government Conservatism in action, and free-market advocates are right to grumble about it, as are all people with common sense and a desire to make up their own minds about things such as how many cable TV channels they want to buy.

S. T. Karnick ([email protected]) is research director for The Heartland Institute.