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Do the old rules still apply to the future of communications technology?

FCC Commissioner calls for government to stop managing competition

A top government official is calling for Washington, D.C. to get out of the dysfunctional and corrupt business of managing industry competition.

Reflecting on the 100th anniversary of a Justice Department deal granting AT&T a legal monopoly over the country’s communications, FCC Commissioner Ajit Pai warned a D.C. audience on Thursday of the pitfalls of regulatory agencies being “captured” by the industries they were created to police.

The deal, called the Kingsbury Commitment of 1913, required AT&T to provide universal service to the nation, and in the name of competition, divest itself of Western Union; conditions government regulators believed would benefit the public good.

Even though the Kingsbury Commitment was ultimately halted when the DOJ broke up AT&T’s monopoly in 1984, public interest advocates continue to hail the principles of the deal as a vital cornerstone of the past century’s telecommunications policy.

The deal’s principles are worth preserving, they argue. Access to the technological advances of the past decade empower the average citizen on a level previously unavailable to even past world leaders, and government regulation is needed because the profit motivations of companies don’t necessarily take this into consideration.

While access to life improving technologies is undoubtedly a good thing, beware of the powerful bearing gifts.

The Kingsbury Commitment itself was a Trojan horse, a way for a corporation to favorably manipulate regulatory conditions at the expense of free market innovation and the benefit of the American public – an all-too-common practice in Washington.

AT&T proposed the Kingsbury Commitment in order to settle a government antitrust challenge out of court. The company then leveraged the deal to beat out local competitors and dominate the telecommunications industry, working against the public interest and the fostering of competition.

But not only did a company solidify its monopolistic power, the deal also lead to the tight regulation of an industry, therefore increasing the power of big government. These are the types of games meddling with our republic today –  the continued interplay and growth of corporate and bureaucratic regulatory power, i.e., progressive corporatism.

Going forward, why would any well-meaning person want more of that?

Pai condemned the deal as a “wolf in sheep’s clothing,” and cautioned against applying its principles to the future of communications technology.

“There shouldn’t be a new Kingsbury Commitment. We don’t need a new Kingsbury Commitment for the wireless world, and we don’t need one for an all-IP world either,” said Pai.

“Instead, the Kingsbury Commitment should remind us of errors we should avoid as we set policies to govern a more mobile, all-IP marketplace,” he said.

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