[1608] in Commercialization & Privatization of the Internet
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daemon@ATHENA.MIT.EDU (Dave Hughes)
Sun Dec 1 23:52:07 1991
Date: Sun, 1 Dec 1991 21:50:53 -0700
From: Dave Hughes <daveh@csn.org>
To: com-priv@psi.com
HR3515? Here is the bulk of a column written a couple weeks ago by
Michael Kinsley that skewers the motives behind HR3515, and shows
why it should not be passed.
His major point is that there was nothing stopping the major newspapers
from getting into the Electronic Information age, and they have
failed to do so. Now they want to stop anyone else who does.
This ran in the Rocky Mountain News - Colorado's largest newspaper -
which is ambivalent about getting their toes into the electronic
waters. I am doing what I can to push them off the diving board,
and fortunatly their top brass is listening. The issue is real to
them because one of the sponsors of that bill is from Colorado,
and the paper has attacked US West for lobbying him.
So both the Dinosaurs of the Big Phone Companies and Big Newspaper
Industry are clumsily slugging it out - while the rest of us armed
with modems or packet radios (which bypass the phone system),
desktop publishing and copying machines, and handheld computers -
the Electronic Cockraches of this Planet, will thrive and multiply.
I'm not worried.
Dave Hughes
dave%oldcolo@csn.org
JANGLING THE BELLS HURTS NEWSPAPERS EARS
Michael Kinsley
Every now and then Washington newspaper readers are treated to a
befuddling war of advertisements over some obscure piece of legislation.
"Without H.R. 278," one might say, "America's rivers will run dry by
1997." Au contraire, rejoins another, "Passage of H.R. 278 will mean
certain death by cancer for every child under 12."
The first rule in understanding these battles is that there is usually
less at stake than meets the eye. The lobbiests, ad agencies, and trade
association executives on both sides of the dispute share an interest in
exaggerating its importance.
The second rule, though, is that somebody is usually trying to get away
with something.
One such dispute Is going on now between the newspaper industry and the
regional Bell phone companies. According to the Bells, the newspapers
want to "prohibit the American public from receiving "... valuable
information services." According to the newspaper publishers, the phone
companies want to invade your privacy: "Call a marriage counselor and
the next thing you know a divorce lawyer may contact you."
This is one of those endless regulatory controversies that fester
quietly for years then erupt periodically, like herpes. The issue is
whether the phone companies should be allowed to sell electronic
"information services" - stock quotes, news headlines, computerized
yellow pages, etc. - over their own phone lines.
The answer has always been "no," but in October an appeals court said
"yes." According to The New York Times: "Unless Congress intervenes,
this decision will allow the Baby Bells to exploit their monopolistic
stranglehold over residential phone lincs and dictate what information
reaches nearly every home."
A third useful rule is that when an interest group asks for special
legislation in the name of "competition," competition is usually what
it is trying to prevent. In this case, newspapers want to keep
potentially powerful rivals out of the information business, Their case
is twofold. First, they say, the Baby Bells will squeeze monopoly
profits out of their phone customers and use the money to subsidize
their entry into the information business. And second, the Bells will
use their monopoly control over the phone lines to discriminate against
competitors. Both arguments are 99% economic nonsense.
As monopolies, the phone companies will certainly charge customers as
much as they can get away with. That is why their rates must be
regukated. But whether or not they are allowed into the information
business has nothing to do with how much they charge their phone
customers. They will charge as much as they can in either event. And
whether they put whatever monopoly profits they can extract into
information services depends entirely on whether they can make money at
it. They have no reason to run this side business at a loss, just to
keep rivals out.
Anyway, most newspapers are monopolies as well - unregulated at that -
with rates of return on capital comparable to the Baby Bells.
In the decade since this controversy started, phone companies have been
banned from the electronic information services business. And yet during
that whole time the newspapers have done practically nothing to enter
the business themselves, apart from a few primitive 900 numbers. The
newspapers are less interested in protecting the electronic revolution
than they are in protecting themselves from tbe electronic revolution.
Ah, but what about those cold calls from divorce lawyers? The argument
is that the phone company knows who you call and could sell those
records to businesses that might find them useful. That might be a
danger. But logically it has nothing to do with question whether the
phone companies should be allowcd to sell electronic information on
their phone lines. If the data is valuable to somebody, there are plenty
of other ways to supply it. If its sale is to be banned, that can be
done without banning the Bells from selling other information over their
lines
After a decade, I am a connoisseur of the arguments in this endless
dispute, and I can't help feeling this latest one reeks of desperation.
The end may be in sight.
