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The Non-Uses of History

By 27 December 2010 No Comment

Harold Leventhal, a D.C. Circuit judge of the 1960s &  70s who was renowned for his administrative law wisdom, once expressed impatience over extended legal regulatory disputation with the comment: “[This] is the kind of issue where a month of experience will be worth a year of hearings” (359 F.2d 624 at 633).

The FCC brags about the endless hearings it has conducted on the Net Neutrality issue, but the 194 pages of last week’s Report and Order contain no reference to the experience with the FCC’s 1992-1995 Video Dialtone initiative. As described by Solveig Singleton in Net Neutrality: Video Dialtone Redux?:

Travel back with me to when the phone companies’ main interest was getting into the cable television business. The late 1980s and early 1990s. The FCC, always anxious to encourage competition, were ready to let the telcos in, provided of course, that they operate their video networks so as to allow equal access and reasonable charges and no exclusivity and/or discrimination… on and on. With the 1996 Act video dialtone was swept away and replaced with a regime of open video services, a model requiring operators to reserve two-thirds of their channel space for unaffiliated content. And despite deregulatory intentions it still went nowhere, especially after the federal courts ruled that OVS operators needed local franchises as well as federal approval.

These brave egalitarian proposals never bore fruit. There were a few trials here and there. But basically nothing. It wasn’t just that the Internet came along, and interest in getting into the one-way video delivery business waned. The whole regulatory apparatus and process inspired by common carriage was just way too cumbersome and slow, and promised far too little return on investment. If there hadn’t been so much delay and complication on the regulatory front, telcos and others could have moved into the video business with some alacrity, before the Net. It was no mere accident of timing that investment moved into then much-less-regulated networks. Investment will always go there.

Right now there are huge opportunities for growth and expansion of broadband networks and services, including content. And problems as well, from spam to capacity limits, from authentication problems to quality of service issues. Hopefully these issues all have technical solutions, but deploying those solutions is going to take some capital. Do we really want to narrow the business models that can be used to raise and recover that capital down to… video dialtone for the Net? Ugh.

It is unnerving to find that the agency is not at all interested in this experience, sort of like an aircraft designer being uninterested in the fact that his last effort crashed on take-off.

Perhaps the FCC should go back even further in history, to Charles Francis Adams book on Railroads, Their Origin and Problems (1886), which reviewed the history of railroad regulation in Great Britain:

In 1872, a committee on railroad amalgamations was appointed, the Marquis of Salisbury and the Earl of Derby being two of its members, which really gave to the whole subject an intelligent consideration. Unlike its predecessors, that committee did not leave the railroad problem where they found it. On the contrary, they advanced it by one entire stage on the road to its solution. In the first place, after taking a vast amount of evidence, they proceeded to review the forty years of experience. The result of that review may be stated in few words.

They showed with grim precision how, during that period, the English railroad legislation had never accomplished anything which it sought to bring about nor prevented anything which it sought to hinder.

The FCC would do well to read Adams’s work, since many of the “railroad neutrality” ideas kicking around the 19th century sound like the “net neutrality” ideas of today, and the proposed solutions are also similar. The chances are remote that things will end better for the FCC (or the Internet) than the experience in Great Britain did for its progenitors.

In the end, the basic approach of the 1872 Commission was to acknowledge that the railroad was sui generis and that its operators should be aware that the government would respond to any abuse of power – but that there was no need to borrow trouble or try to anticipate what might happen until problems actually arose, and that the industry should be left free to develop on its own.

Locomotive image from FreeFoto.

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