Fast Track To a Fiasco

The House of Representatives, unable t o admit that it cannot get its mind around the vast complexity of the cybersphere, is about to give up and wave through the biggest restructuring of the communications field in 60 years—without floor debate or amendments. The consequences for the nation’s economy and future technological dominance are at least as consequential as the issues of health care. But given the way House leaders are handling what will probably become known as the Telecommunications Act of 1994, most of the consequences may be of the unintended kind.

The two bills coming jointly to the floor Tuesday have been in final drafting since the Ides of March, when they were the subject of only a day each of committee markup, following brief hearings. Remarkably, they appeared in print only this past Friday, so it seems sure that most members of Congress will not have read the 200-some dense pages of legislation by voting time. It is likely, in fact, that even many members of the committees involved are unfamiliar with the bills’ latest provisions, which were the extensive handiwork of a few members and staff. No wonder the leadership wants to duck a debate.

Regardless of the confusion about specific provisions, however, one thing is clear: the model embodied in the two pasted-together bills (HR 3626 and HR 3636) is mostly the pro-monopoly regulatory regime of early telephone days. This, in turn, looks back to railroad legislation of the last century.

Real competition–the kind that looks to the successful model of the American computer industry–is merely paid lip service. With real competition you let everybody compete with everybody, you get winners as well as losers, and the prospect of a product or service outperforming the competition is exactly what invigorates markets. It means that innovations do take place and quickly, and that costs are reduced.

In contrast, the proposed legislation would attempt to something called competition through a mishmash of new regulatory provisions issued by the Federal Communications Commission and state agencies (leading to more litigation), plus mandated subsidies (taxes in disguise) to ensure universal service. This is truncated competition, where nobody wins, nobody loses and nobody wants to invest.

Behind the scenes, the sudden rush job on telecommunications after 13 or so years of low-intensity discussion is being justified on the grounds that there are so many industries in conflict-Baby Bells, small exchanges, long-distance carriers, wireless companies, cable, and even computer companies of various kinds-and the stakes are in such megabillions of dollars, that a real debate might blow up the tenuous agreement that has been reached among the bills’ sponsors: Reps. Jack Brooks, John Dingell, Ed Markey and Jack Fields.

But the outcome is like the old fortune cookie message: “Many choices and you pick the worst.” The worst, in this case, is a Rube Goldberg industrial policy sure to make the public as well as the business community unhappy before lone.

The personal computer (PC) industry is not directly tied to the telecom legislation, but one of its most potent spokesmen, Andy Groves, CEO of the microchip manufacturer Intel, sees danger for the whole high-technology field in the poorly thought-out regulatory regime now proposed. A sloppy law is sure to put the country’s high-tech economy–which is the driving wedge of the general economy–at the mercy of endless regulatory and legal battles.

“I don’t think governmental agencies are helpful in propagating technology,” he warned a few days ago on the Larry King show. “The PC industry is the most deregulated industry. This was a factor in its being so brutally competitive, providing the access to the PCs that ordinary people have today.”

If a complex regulatory approach is the very worst way to build the information superhighway, it is also one of the worst ways to shore up damaged public support for Congress. As we enter the new information age, there are more and more people like Ross Perot calling for the public at home to make electronic insta-vote decisions on complicated national issues. The sound rebuttal is that. we have a Congress because we need to ensure deliberation. That’s the reason for a representative democracy.

But what is the reason when the Congress does not deliberate?