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Jewish World Review June 27, 2000 / 24 Sivan, 5760

James K. Glassman

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Consumer Reports

Free market wins
in Federal Court! --
FOR SEVERAL MONTHS, Iíve been warning investors about the increasing political risks facing tech stocks. On several fronts, lawyers and regulators have threatened new roadblocks to growth and innovation. This week, Iím happy to report that one potential threat of government intervention has been removed from the tech marketplace.

The 9th U.S. Circuit Court of Appeals has ruled that local governments canít force the owners of high-speed data networks to share them with the companies that donít own high-speed networks. This should have been a no-brainer. Common sense tells you that government has no business dictating the terms under which you rent your property to other people. But somehow, thanks to an aggressive lobbying campaign and a catchy buzzword (ďopen accessĒ), many reporters took seriously the idea that cable companies should be forced to rent out their property at prices set by government.

This silver lining does have one cloud. Judge Owen Panner, who ruled in this case involving AT&Tís cable system in Portland, OR, didnít say that no government could ever regulate broadband, high-speed Internet services. He said only that local government could not regulate, because such matters fall under the jurisdiction of Federal telecommunications laws. That means that a free market online, and the vibrant growth that has always resulted from unregulated computer markets, now depend on the FCC.

This is probably good news, because FCC Chairman William Kennard has thus far shown a healthy respect for free markets. He seems to understand that the Internet will not continue its magnificent development if it inherits the burden of old-fashioned telecom regulation. And, in a little noticed but potentially significant development, the FCC Chairman has begun to consider new ways to liberate the airwaves. Specifically, Kennard is contemplating granting property rights to the companies that currently own cellular telephone and PCS licenses. Right now, for example, if a company buys a license to operate a cell phone network in Detroit within a given slice of the airwaves, the company doesnít actually own that piece of the airwaves. It just has a license to operate a certain type of equipment with all kinds of strings attached. Granting property rights would allow companies greater freedom to deploy better technology whenever itís available, not whenever the Commission grants a waiver.

What does this have to do with keeping the next-generation of Internet services free from regulation? Tech fans should be encouraged that the FCC Chairman seems to appreciate the value of property and the costs of bureaucracy. So will the FCC keep its hands off the Internet? Right now, the answer appears to be yes.

JWR contributor James K. Glassman is the host of Tech Central Station. Comment by clicking here.


06/22/00: Wireless Bargains?
06/20/00: Is Your SUV Warming the Planet?
06/15/00: Shopping for Government
06/13/00: Top 10 Tech Stocks
06/08/00: Riding the eBook Wave
06/06/00: "The Last Mile"
06/02/00: Keep Buying!
05/31/00: Who Asked the FTC to Regulate Online Privacy?
05/25/00: "When Itís Time to Sell"
05/23/00: End the "Telephone Tax"
05/16/00: Time Warner Gets a Bad Rap

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