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The Jan. 8th release of Susan Crawford’s new book “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age” has drawn a firestorm of criticism from industry and policy experts alike.

In a review for The Wall Street Journal, American Enterprise Institute Fellow Nick Schulz counters Crawford’s claim that Americans have been harmed by a “lack of [government] supervision” of telecommunications providers, explaining the trend towards deregulation has been embraced by both parties.

“Indeed, the bipartisan deregulation movement of the 1970s and early 1980s that liberated trucking, airlines and telecommunications from choking regulation was a moment of reckoning, an attempt to come to terms, at last, with the legacy of progressive regulation. It wasn't often that Ted Kennedy and Ronald Reagan joined hands in common cause, but they did in this case. The practical shortcomings of regulation were overwhelming.”

NetCompetition Chairman Scott Cleland believes Crawford “cherry picks her information to try and convince the reader that broadband must be regulated like a public utility.” Why is broadband not a public utility?

“First, broadband is a competitive offering, not a natural monopoly service. The U.S. is the only nation in the world where consumers have their competitive choice of two ubiquitous wire line broadband networks, four ubiquitous wireless broadband networks, and two satellite broadband providers. Second, public utilities are based on single-use-facility economics. Broadband provider facilities are the opposite… Third, utilities deliver uniform units, while broadband delivers completely variable units. Since electric utilities only transmit electricity and water utilities only transport water, they only require availability management. Broadband is intrinsically different requiring network management to provide quality of service for multiple services with very different performance requirements and to continuously manage and combat: viruses, malware, bot-nets, denial-of-service attacks and spam. Fourth, utilities are inherently ”dumb” networks, while broadband networks are inherently “smart” networks… in that they can be monitored and repaired remotely. Fifth, utilities are characterized by standard uniformity and glacial rates of change. In contrast, competitive broadband facilities are characterized by diversity, differentiation, and innovation because they operate in a continuously and rapidly changing competitive environment.”

Free State Foundation President Randolph May describesCaptive Audience” as “fundamentally flawed.”

"Captive Audience" is flawed because Professor Crawford relies on an incorrect – indeed, a hypothesized – view of the communications and information services marketplace to construct the case for monopoly power. And then she offers anachronistic, legacy regulatory measures to remedy the supposed ills that exist in her hypothesized market.” May suggests a different title for the book: "Captive Thinking: Viewing Today's Telecom Industry Through An Analog-Era Lens.”

Captive Audience’s” policy prescription of “broadband unbundling” aimed at “reducing broadband service providers to the smallest possible role in communications services” is thoroughly rejected by Information Technology and Innovation Foundation Fellow Richard Bennett. [Unbundling] “would put both the financial and the technical bases of broadband in a severe bind, of course. Experiments with unbundling have shown that it can reduce consumer prices only temporarily, at the expense of ongoing investment in upgrades to network wiring and electronics. Deferred investment creates a series of deferred crises that can only be resolved by repeated taxpayer intervention on an uncertain schedule dictated by political factors.”

Crawford’s call for heavy-handed government regulation of broadband is at odds with the “hands off” policies that have made the Internet so successful. Indeed, as Internet analyst Larry Downes recently wrote, well-crafted public policy that incents private sector investment will lead to a rebuilding of the nation’s communications infrastructure, ensuring an era of prosperity and opportunity well into the future. 

Other blog posts about: Broadband Policy, Broadband Recommendations

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