Arnold Kling

Frankston and the FCC

Arnold Kling, Great Questions of Economics
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If you're looking for eloquent quotes describing the FCC as obsolete, go to this essay by Bob Frankston. It's hard to pick a favorite, but I'll go with

At 1970 prices the computer under my desk would cost a billion dollars just for the memory alone. Somehow that seems normal and no longer surprising.

But when we try to apply the same metrics to telecommunications we are ignored because it is unbelievable. It is simply too difficult for most people, especially the senior rule makers, to really believe in this kind of change.

His point is that the cost of bandwidth has fallen sharply, but consumers cannot obtain the benefits because bandwidth continues to be segregated by content: phone service goes through one channel, television through another channel, etc.

Discussion Question. Frankston's main policy prescription is to break up the phone companies vertically. But why is not market competition from wireless Internet and cable Internet sufficient to force down prices?

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