Yes, kiddies, they can regulate cyberspace - and other heresies.
Tell Eli (rhymes with telly) Noam he's prolific, and he paints himself as something of a slouch. Sure, he's authored or edited 17 books and is about to publish six more. But, he protests, "if I'd been so prolific, these two volumes would have been finished by summer." Israeli-born Noam (who simultaneously earned a law degree and an economics PhD from Harvard) heads the Columbia Institute for Tele-Information, which, simply put, studies mass media. Noam's politics and economics follow a free-market bent, but he's no ideologue. He's a former head of the New York State Public Service Commission and has served on advisory boards for the IRS and other government bodies. No doubt, his advice has disturbed many a bureaucrat.
Wired: You've talked about a collection of media critics you call the Cassandra Industry, and you say that they're a lot more dangerous than we might think.
Noam: There is a fear of a fragmented, decentralized, chaotic, uncontrollable environment. Computers have always been this mysterious force, and people read into them their fears and hopes. In the past there was this 1984-style notion of Big Brother, that all data will be centralized and controlled by the government. That model was replaced by the hacker scenario, where 14-year-olds could start nuclear wars on their own. As usual, the protection of children is being brought into the argument. And the complaint is that there is not enough government control. A similar shift hit television. There was the notion of the lowest common denominator and bland mass culture. Television started to fragment into dozens, then hundreds, of channels; now critics are lamenting the loss of a common denominator and the electronic hearth around which everybody congregates. And it's the same people complaining!
The computer communications media have actually had a pretty good run. They haven't been ganged up on yet in quite the same way, perhaps because of a certain fascination, but I expect that this will no doubt happen - you see those manifestations already in issues like the Exon amendment.
But doesn't the Net route around regulation?
The notion that you cannot regulate the Internet is the wishful thinking of technologists. The Internet will create winners, and, precisely because it is so effective, many losers - and the losers will tend to be established, organized institutions. If you think of the Internet as electronic content, it is very difficult to regulate. But there are physical manifestations, physical networks. Governments will grab those factors that are less mobile. You will always be able to regulate phone companies, because they've got central offices, networks. What about these satellite companies? Teledesic is owned by people. One of them is Bill Gates. You can go after Bill Gates.
The Telecommunications Act of 1996 didn't take us very far toward the more open regulatory environment you champion.
The '96 act has been vastly oversold to the public by various politicians and lobbyists trying to grab credit. It's not the cause of change, it's the result of change. The act establishes a fairly detailed regulatory régime. In many respects it regulates in order to deregulate; everything is supposed to be transitional to competition. I happen to live in New York under a transitional régime of rent control. It was supposed to deal only with a housing emergency following World War II. It's still around.
You'd like to see a freer market in spectrum auctions.
In the past, frequencies were granted by government to parties who had the best lawyers or had the most influence. More recently, the government started to auction off frequencies. This is still based on the concept of real estate, which you own. I find it better to think of spectrum in terms of paying for access rights. You have to pay only for the usage. It's also, in constitutional terms, the correct solution: I believe the government has only the right to prevent collisions of users of frequencies, rather than selling the rights to use the ether. Airplanes fly between cities without having to pay for air space. The airlines bid for landing gates.
You're talking about a spectrum commodities exchange.
If somebody wants to buy access, they would buy it in a spot market or a futures market. There would be a limited number of access codes issued by a clearinghouse of spectrum users, and they would then be traded among brokers. The technology is not the main problem with implementing this. It's economic interests, political inertia.
How would consumer prices work?
They could be higher for the congestion periods, and lower in low-congestion periods. Under a futures exchange, they should be lower, because it would be more difficult to maintain a cartel that establishes high prices. You see the reverse in the price of digital cellular service, where prices were bid up by the current auction system, which treats spectrum like property.
Banking is another entrenched industry you say will be transformed as digital information pushes governments toward freer markets.
The banking system will be transformed in major ways. We'll have private monies. Governments will be out of the business of monetary policy; they will be competing in global currency. If there is a role for government, it's more likely to be quality control, consumer protection. Government's control over money is important if there is one currency and one inflation rate. But if you have multiple currencies, there will be multiple inflation rates, and people will pick and choose those monies they want to be in.
Look what happened to the phone companies. There was a notion that for a society to have communications, you needed Ma Bell and a clear regulatory system. The idea of multiplicity and diversity, of people shifting in and out - that competition and choice would govern - was hard to swallow.
People feared chaos. Chaos didn't happen.
