An Infested Information Age

Earlier this year, political commentators laughed off Newi Gingrich's suggestion that homeless individuals could find upward mobility by acquiring laptops and joining the information age. Yet unlike most of the off-the-cuff comments which have cost the Speaker credibility over the past few months, this comment revealed part of the deeper structure of Republican plans for hegemony over the coming years. As the United States enters its post-industrial age, the conservative Congress is working hard to ensure continuing close ties with the builders of the information highway.

Unlike many of the flashier aspects of the Contract With America, the Telecommunications Competition and Deregulation Act of 1995 has garnered little attention from the media. Floor-managed by the lightweight Senator Pressler of South Dakota, the Act passed the Senate and the House by wide margins. Given the complexity of the technological issues involved, it is unlikely that the American public will pay much attention to upcoming wrangling between President Clinton and Congressional leaders over the bill's disposition. However, this issue is exceptionally important to the future management of communicative interactions in the American public and private sphere.

In order to introduce the issues, a little background is in order. Until AT&T was broken up in the divestiture decisions of the early 1980s, U.S. telephone service was essentially a regulated monopoly. After the "break-up" of AT&T in 1984, seven regional "Baby Bells" entered the industry, along with a host of long-distance competitors. Because of their continuing monopoly power (over local areas), the Baby Bells agreed not to compete in the provision of "information services" or video transmission. This was to allow truly competitive markets to develop in these areas.

The logic of this divestiture made sense initially but started to break down because of technological innovation known as the "convergence of modes." Essentially, engineers have devised ways of digitally transporting telecommunications ranging from letters to pictures to sounds on a single set of wires. This means that one socket could carry all this electronic information to the home. And different players ranging from cable television companies to the Baby Bells have jockeyed for position to be the first players to complete this "rewiring" in local markets.

Given the unruly maneuvering that has broken out among telecommunications firms seeking to provide this service, and the vast importance of such a communicative infrastructure to our nation's future, you might think the federal government should be involved in planning the structure of these vital services. However, most of Congress disagrees. Addled by poorly researched deregulatory polemics such as Philip K. Howard's The Politics of Common Sense, members of congress have moved for "reforms" in telecommunications that decimate government's role in regulating this vital field.

If they go through conference unscathed, House Resolution 1555 and Senate Resolution 652 will let cable television and local phone companies enter each other's business; reverse price cuts and regulations from the 1992 Cable Television Act; and loosen restrictions on media ownership. The bill threatens to create a mass media market dominated by corporate interests and economically inefficient to boot.

You don't need to be a Nobel Prize winner in economics to notice that the wiring of the information superhighway has enormous economics of scale--firms that are able to quickly jump out in front will have an immense advantage over less agile competitors. After a series of bruising battles and mergers, the market for common carriers of electronic messages will quickly become oligopolistic or monopolistic. And just where the telecommunications reformers had promised to keep an open marketplace, fantastically wealthy businessmen will have colluded for exactly the opposite effect.

The consequences for American democracy are ominous. As corporate giants quickly corner the information market and gobble up local television, radio, and newspaper outlets, press diversity will suffer. The logic of profit-driven programming will guarantee us more inanity in our sitcoms, more frivolity in our newscasts, more vacuity in our talk shows. The Republicans' efforts ignore one simple principle--true competition in the marketplace of ideas requires public regulation of communicative forums.

Yet even beyond its disastrous social consequences, the deregulatory fervor driving this bill demonstrates precious little knowledge of economics as well. Like the mail service, phone and cable companies have long operated off the principle of cross-subsidization--in order to keep rates standard, customers in densely populated regions pay a de facto subsidy for rural ratepayers. Phone companies have long used this principle to use the bills of profitable long-distance customers to help pay for local service.

Now any upstart company can skim off the most profitable segment of a market by a providing services only to large companies. Just as cherrypicking insurance companies take advantage of more socially responsible guarantors of health care, "competitive access providers" will be undermining the community minded practices of regulated monopolies.

Despite these problems, only those uninitated to Republican antics in the House are amazed at this point that the bill in question managed to pass. As the Republican revolution gets routinized as politics as usual, the story is all too familiar by now. House Commerce Chair Bliley was in the pocket of long-distance carriers like AT&T, and he looked to aid them by permitting only the Baby Bells to enter long-distance markets after long-distance carriers got a chance to establish themselves locally.

However, aggressive lobbyists for the Baby Bells soon persuaded leading Republicans like Newt Gingrich to "stay true to their deregulatory roots" and vote for immediate, total deregulation. As more and more government decisions get decided by the highest bidder, the Baby Bells look to turn their current advantages into total domination of the information market.

Alarmed by the Capital Cities/ABC and Westinghouse/CBS mergers, President Clinton has promised to block the bill for now. Unfortunately, his veto threat looks unsustainable. Hopefully the Democrats who have acquiesced in this conservative power grab will soon come to their senses and realize their true commitments to the American people. If not, we can expect even more grossly unfair electoral competition and an even less socially responsible media in the future.