Reed Hundt never got around to smothering the wireless industry with regulations while he was chairman of the FCC, and the wireless industry thrived as a result. Unfortunately, now he’s trying to make up for lost time.
Hundt has joined the clamor for so called net neutrality—a proposed new set of restrictions on privately owned communications networks that would restrict their ability to innovate new products and services, and also restrict their ability to manage the flood of new traffic that is moving onto data networks.
Of course, Hundt has more than just a passing policy interest in the topic: He is a principle in a new business venture called Frontline Wireless, which is basically a group of well-connected former FCC chairmen, commissioners and staffers who know the system and can envision a lucrative business for themselves and their investors—provided they can get the FCC to favor Frontline’s business model.
Hundt’s Frontline Wireless wants to place a bid in the 700 Mhz auction to obtain some spectrum used for communications but only if it is on his terms—which unfortunately would suppress the value of the spectrum to others.
Attaching conditions to spectrum auctions that favor particular business models is plain and simple industrial policy—government taking the role of determining which business models should be favored, and which should be disfavored. It’s a terrible idea, because a driver of innovation in our economy is the freedom of businesses to experiment with business models on a level playing field, undistorted by government preconditions.
As attempted justification, Hundt suggests that today’s telecommunications networks are in common carriage like roads, but the point is absurd. The common carriage logic only applies where there is a clear monopoly position. However, today no consumer questions the vibrancy of the competition in the communications marketplace, particularly in the wireless marketplace.
Causing a recession in the voice communications market while he was chairman of the FCC was apparently not enough for Hundt—now he wants to threaten the vibrancy of today’s wireless market for the benefit of himself and his cronies at Frontline Wireless.
The kinds of restrictions Hundt is seeking in order to benefit a handful of well-connected political players is not only wrong, but will also pose a serious threat to our vibrant and competitive wireless market—a market that consumers have enthusiastically endorsed in the absence of government regulation.
Next time you walk into a cell phone or consumer electronics store and are bewildered by the array of choices not only among the handsets themselves, but also among providers and calling plans, remember: Reed Hundt thinks there is not enough competition, and the solution is for the government to favor the entry of a new competitor. It’s purely a coincidence that it’s his company.