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The Big Squeeze: Monopolies in Wired and Wireless Access

Susan Crawford, Professor, Cardozo Law School

Date: Tuesday, June 28

Time: 2:20 - 2:40 PM

Location: Salon E

Category: Policy & Regulation

Now or very soon, most Americans will have a single provider of wired high-speed data (at data rates that people around the world increasingly demand) to each community; thus, in each metropolitan area, wired access to information, entertainment, news, and communication will be controlled by a single actor. That actor, the local cable monopoly, is, at the moment, unconstrained by real competition or oversight, and benefits from overwhelming economies of scale. (Foreshadowing: wireless access won't save us.) 

Although rewriting the Telecommunications Act to make clear that the cable monopolists are required to share their lines - thus unleashing competition, driving prices down, and fostering a healthier cultural ecosystem - would make economic sense, the Commission so far has been unwilling to require this under existing law and it will take an epic battle on Capitol Hill to get there. Something must be done to provide basic reasonably-priced nondiscriminatory very-high-speed communications facilities to Americans. Other countries have figured this out and we should be able to as well. At the moment, however, legislators who are benefiting from contributions from the telecommunications sector have no particular incentive to regulate these actors; the fact is that a rewrite of the Telecommunications Act would be viewed by legislators, unconsciously or consciously, as an occasion for substantial fundraising from giant telecommunications carriers. 

In the meantime, the Department of Justice and Congress both have substantial roles to play. Congress can hold hearings about the market power of the cable industry that lead to antitrust inquiries and, one hopes, to additional public interest in the role of the carriers and new efforts to protect independent programmers, application developers, and consumers should be mounted. 

An awakened Antitrust Division will play a central role in the next few acts of this drama, which should include a detailed examination of the economic facts behind TV Everywhere, usage-based billing, service that is prohibitively expensive for a large subset of Americans, and the effects on device competition of the cable companies' insistence that standardized, self-certified devices should not be allowed to attach to their networks. Although this seems unthinkable at the moment, it may be time to separate distribution from content once and for all - just as a cabinet-level committee convened by President Nixon suggested- so that the inherent conflict of interest at the heart of the cable distribution business model is eliminated.

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