Notorious former regulator Reed Hundt admitted he tried to screw telephone companies and broadcasters during a session at Columbia University, according to Harry Jessell at TVNewsCheck.
“In other words, we stole the value from the telephone network and gave it to … society. When I say we stole it, it was a government rule that produced this outcome.”
If this doesn’t sound Nixonian, it ought to. It was Nixon who famously said, “If the President does it, it is not illegal.” But the president is not above the law, and he was forced to resign.
Also, one cannot steal from a company, although this point is often overlooked. One can only steal from a group of investors, employees and/or consumers. They are the ones who ultimately pay.
While the FCC was stealing from the communities of interest represented by the telephone companies, Hundt said, it also tried to repress broadcasting: “This is a little naughty: We delayed the transition to HDTV and fought a big battle against the whole idea.”
Hundt thought his actions all served a higher purpose, i.e., “We decided … that the Internet ought to be the common medium in the United States and that broadcast should not be,” he said. “We also thought the Internet would fundamentally be pro-democracy and that broadcast had become a threat to democracy.” Huh?
Hundt’s meddling could also be called industrial policy, central planning and picking winners and losers.
Hundt boasted that identifying and encouraging a particular medium as the common one was unprecedented in American history, according to Jessell. “It has actually been an essential characteristic of media in the United States that we have never had a plan and we have felt that that was in the nature of our democracy and our capitalism to not have a plan,” Hundt said. “It’s kind of interesting to think that we are now imitating China in this particular respect,” he added.
For that matter, I wonder whether the new National Broadband Plan could also be compared to a Maoist “Great Leap Forward” or Soviet-style Five Year Plan? I don’t know anyone who argues Communism brought prosperity and human rights to China, the Soviet Union, Eastern European satellites or anywhere else. Throughout history, collectivism has always failed. Communism produced the Ukrainian famine of the 1930s, the Gulag Archipelago, the killing fields of Cambodia and countless other examples of poverty, torture and executions. But for many people the Dream will never die, obviously.
During Hundt’s tenure, the FCC adopted “sharp-edged rules” to create a diversity of competitors who could “weaken the political influence of the big, established (and typically Republican-leaning) firms,” (emphasis added.) as well as create choice for consumers. (Reed E. Hundt, You Say You Want a Revolution: A Story of Information Age Politics (Yale Univ. Press 2000) at p. 15).
Whether Hundt realized it or not, consumers would have been winners without his grand scheme. Fiber optic, wireless and computing technologies were and still are in the process of relentlessly slashing the cost new entrants incur when investing in competitive network facilities. As the late professor Schumpeter counseled, monopoly power cannot last for long “unless buttressed by public authority.” Which is why a central feature of the Telecommunications Act of 1996 was to invalidate exclusive franchises which shielded incumbent providers from competition.
In fact, Hundt probably harmed consumers by creating a bonanza for lobbyists and litigators and delaying investment in broadband. But, as Hundt pointed out,
Congress had not been mindful of Senator McCain’s repeated warnings against transferring power to me. Now, … the Telecommunications Act of 1996 made me, at least for a limited time, … one of the most powerful persons in the communications revolution. (Hundt at 148)
For Hundt, the chance to be a “master builder” of the information economy was the “chance of a lifetime.” (Hundt at 153)
Hundt complained that the other commissioners “told anyone who would listen that I was arrogant, imperious, stubborn, self-righteous, deceitful.” (Hundt at 182)
There it is, in his own words.
Unfortunately, Hundt exemplifies the type of person we frequently get when we opt for activist government.