Wireless Oligopoly Was Created by Government Regulation
" We are too busy mopping the floor to turn off the faucet." — Albert Einstein
Wired on Tuesday ran an article called "Wireless Oligopoly Is Smother of Invention" pointing out how restrictive of choice the current carrier oligopoly in the US is. Ryan Singel does an excellent job in contrasting the wireless industry with the TV and Internet service provision industry to illustrate just how closed and restrictive the wireless carriers are. I can vouch that this is not the case only in the USA, but to at least some extent other countries as well, including the one I am in.
Unfortunately, although not surprisingly, Mr. Singel falls into a popular trap of calling for regulation as the solution to this problem. He calls for the FCC to set the ground rules which would force the carriers to open up support for all devices which conform to certain standards. It's a rather simplistic, albeit popular, approach to solving the problem. Simply envision how you would want others to do business and then turn these wishes into rules that must be imposed on them, without looking at even the bit of such fussy details as how did the current situation came to be to begin with.
This mentality typically sees government regulation as the solution to nearly every social and economic problem. Whether a particular problem was created by past government action completely escapes them. It is not even considered. It is always about the private individuals, companies or corporations versus the people, and the government as playing the role of a perpetual savior no matter what it does. People with such a mentality seem to complain about the government being bad mostly when it actually fails to listen and grow the legislature to include their latest demands for regulation.
The clues to the reason why this is such a shortsighted proposal are in the article itself. Mr. Siegel says that the "airwaves are ours" which in modern newspeak means that they are controlled by the government. The airwaves were only rented to the carriers to use, as Mr. Siegel points out as well while failing to see the problem with government being the one to decide whom can or cannot use the airwaves. He completely misses to see the fact that those whom the government didn't allow to use the airwaves are not and cannot compete in this market.
Yet this fact alone provides a glimpse to the possibility that this bad oligopoly he is chastazing was created by the government itself, and is being maintained by it. One cannot simply open up shop, check for available frequencies and start competing. You need government approval to even start the business in this industry which essentially means that the industry is consisted of the privileged few whom the government selected and approved. I don't know how can it be made more obvious that the oligopoly exists as a direct result of government involvement.
It goes deeper of course, as one of the commenters to the story pointed out:
"Oligopolies only survive in concert with big government. A truly free system would not let this happen. So, for all those who think the government should do more, remember that they got us into this mess through auctions and regulations that favor a handful of large corporations who show their gratitude with campaign donations." — delahaya (Wired commenter)
A nearly inevitable symptom of representative democracy, especially of the kind in place in the US: campaign contributions and associated political gratitude. We could go even deeper and explore the fact that the corporations as such are in fact a government construct as well, as the movie "The Corporation" vividly illustrates. It is not an entity that arose out of the free market, but rather a merger of private and government power.
The institution of a corporation empowers businesses registered as corporations to dodge market feedback. "Limited liability" means what it says. It allows corporations to get away with not serving their customers the way customers want while lobbying the government for more privileges. It is what certainly contributes to the existence of corporations so big that they outweigh whole governments and so seemingly invulnerable that boycotts have little effect.
It is quite ironic that people are so unwilling to trust these big corporations (and rightfully so) yet so willing to trust the government which gave those corporations the bulk of their power and literally created the oligopolies. Talk about asking the mafia men for protection from the consequences of their own crimes.
What is my proposed solution? I'm afraid it is difficult to undo the decades and centuries of following the same old slippery path; "solving" the consequences of government invovlement with more government involvement. It's quite a tight knot to unravel. Just stepping off that slippery path would be a good start.
I would support watch groups which keep a close eye on both the government and the oligopolies while forming the specifications that people like Mr. Singel would like the carriers to follow, creating a brand for them which companies can use to market their products as "open" in hopes of gaining more business.
There are many examples of watch groups and standards organizations which are not government agenices, such as World Wide Web Consortium (W3C) for web standards. Not all companies follow web standards, but these organizations combined with market demand for opennes creates enough incentive to follow open standards for companies to be inclined to converge towards them. Even Microsoft is trying to follow them even though there is no law that says they have to. If Microsoft, a huge corporation, can be swayed by such "mere" market based action how much more can be accomplished if the government was even less involved in granting businesses corporate privileges they enjoy?
A crucial first thing to do on that front would be to remove the power of government to assign frequencies and select whom can use them (and therefore who can compete), and leave the task of tracking available frequencies to a non-government agency which can provide market incentives for companies not to infiltrate other companies' frequencies. This would immediately open the doors to competition since startups could enter the industry without government approval and the costs associated with applying for it.
There is the potential for innovation, choice and openness we are now missing! More of the same, government regulation, will only create more problems down the road. You cannot put out the fire by throwing more oil in it. You cannot solve the problem with the same thinking that created it.