Gilder as Charged

Over at Tech Central Station self-styled tech guru George Gilder gets smacked around for his backing of the regional Bell systems in their disputes with the FCC.

Laurence Kotlikoff notes that it makes no sense to suppose that the Bells will ever make new investments in equipment or lower their prices if they are granted monopoly status in their local markets.

Kotlikoff consults for AT&T, so we know his anti-Bell feelings up front. The Bell apologists in the telecom policy field should also be as forthcoming.

Comments

[Julian Sanchez]

I have no dog in this fight, but bits of this argument are truly bizarre. Anyone who's ever sat in a traffic jam knows that roads are not "non-rival" in the full sense, unless any resource capable of simultaneous use by more than one person now counts. And they're rather obviously not non-excludable, the other defining characteristic of a "public good." What I think he meant to say is that roads are a natural monopoly in a given region, which makes a lot more sense, but is a separate issue.

[roland]

People much smarter than me write for TCS, but as this debate shows, discussion at TCS is often fundamentally tainted by conflicts of interest.

[Murrel]

The problem here relates back to Judge Green's original decision while breaking up the AT&T monopoly.

The industry has traditionally been looked upon as encompassing two factions: the Local exchange and long distance, when in fact the dicotomy should have been viewed as a consumer resale segment and a wholesale backbone segment.

In view of the thinking of the time, it's understandible why this was done, but a far reaching understanding would have shown that you can't leave a monopoly with both the incumbent retail sales AND ownerhsip of the backbone and expect competition to develop.

The mistake we commonly make (and sometimes I think Cato has it as a fundamental flaw)is that when the government creates a monopoly, it can't be easily turned into a good competitive member of society without taking strong measures to insure a level playing field after "competition" has been restored. Just freeing a government built monpoly of regulations does not make a level playing field.

It is NOT an accidnet that NO ILEC has failed while ALL the CLECs have either failed or run into serious trouble.

Add to this that the recent rangling between the Baby Bells and the Long Distance carriers has killed an entire small business ISP industry and that the FCC considers pitting monopolies against each other (cable v DSL v wireless) as a way of ensuring competition, and you can see why telecommmunications is in such a mess.