How Deregulation Gave Us FM Radio, HBO, and the iPhone

The FCC is designed to protect incumbents, enrich politicians, and screw consumers, says economist Thomas Hazlett.

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“We’ve gone to a modern [broadcast] system that has a lot of places where stuff can happen without permission,” says Thomas W. Hazlett, who’s the FCC’s former chief economist, a professor at Clemson University, and author of the new book The Political Spectrum: The Tumultuous Liberation of Wireless Technology, from Herbert Hoover to the Smartphone. “And we have seen that the smartphone revolution and some other great stuff in the wireless space has really burgeoned…That comes from deregulation.”

So-called net neutrality rules are designed to solve a non-existent problem and threaten to restrict consumer choice, Hazlett tells Reason’s Nick Gillespie. “The travesty is there’s already a regulatory scheme [to address anti-competitive behavior]—it’s called antitrust law.”

Greater autonomy and consumer freedom led to the development of cable television, the smartphone revolution, and the modern internet. While we’ve come a long way from the old days of mother-may-I pleading with the FCC to grant licenses for new technology, Hazlett says, “there’s a lot farther to go and there’s a lot of stuff out there that’s being suppressed.”

He points to the history of radio and television. Herbert Hoover and Lyndon Johnson exercised extraordinary control over spectrum allocation, which they used for their own political and financial gain. With liberalization, we now have hundreds of hours of varied television programming as compared to the big three broadcast networks of the ’60s, an abundance of choices in smartphone providers and networks as compared to the Ma Bell monopoly, and more to come.

Hazlett also discusses his views on current FCC Chairman Ajit Pai, how the FCC delayed the arrival of cable television to protect incumbent broadcasters, and “the most infamous statement ever made by an FCC regulator” in a 1981 Q&A with Reason magazine.

Interview by Nick Gillespie. Edited by Justin Monticello. Cameras by Todd Krainin and Mark McDaniel. Music by RW Smith (https://www.youtube.com/watch?v=bsiT_BZJc0E).

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About Paul Gordon 1358 Articles

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21 Comments

  1. Cool thing about FM Radio, HBO and iPhone – they are all something you can choose to have or not have, and you have a choice between brands and vendors.

    I can buy any FM Radio brand I want, tune into any FM radio station I want, I can choose HBO, Netflix or Amazon or none of the above, I can choose an iPhone or a Samsung and connect them to several different providers …all stuff that can do without commercial regulation.

    However, some things, infrastructure especially – such as the internet cable to your house aren't something you can just 'choose' another supplier for. They in fact are not open to competition by their very nature.

    If my internet cable provider decides to do something I don't like – I don't get to just 'buy another one'.

    That's why sensible and reasonable regulation of noncompetitive elements is the rational thing to do.

    The issue here isn't the concept of regulation, the issue is that the regulators are in the pockets of the companies.

    That's a separate issue, and should be treated as such.

  2. Regulations only protect the market share of the largest businesses who can easily afford to comply to simple rules and sometimes also get a tax or law exemption due to connections in Washington….Regulations only hinder entrepreneurship and innovation that would normally bubble up organically from the masses of poor

  3. Speaking of regulation, remember when everything other than about a 3 Mhz bandwidth was choked off in the 90s? Yes it killed FM radio. It was awesome before that. History is repeating itself with the orwellian killing of net neutrality as we speak.

  4. The Business of Radio blossomed to life in large part, just came from the Military

    The problem with the stand ReasonTV takes is it is looking at the wrong symptom when they make their diagnosis. The disease is incorrectly diagnosed as creative (R&D) and innovative (in the marketplace) inertia. The symptom they are treating to no avail is over-regulation (over includes too much, unnecessary and foolish). The real disease is the power of near monopolies to hold consumers hostage for essential utilities. Reason always has one sided discussions. They are of the Friedman camp. It is OK that workers die everyday in the plant, for it is better than them living like naked animals in a swap. No shit.

  5. The government as been a major player in the digital era, and without its role, we wouldn't have internet and satellites. These two are the key technologies that have driven Apple's success. So say that deregulation has brought us the iphone is therefore highly exaggerated.

  6. Strange you didn't mention what happened to Georgia congressman Edward Cox? In Georgia the Cox family are one of the richest families the South-east, due to their radio and television station Holdings, with a net worth of over 9 billion.

  7. Choice, and the freedom to do so is at the center of a civilized free society. Choice gives an individual power over industry and government. The power to, or not to participate along with the power to buy and not to buy.

    Collectivism eliminates the randomness of individual innovation.

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