PUC Mission Creep

The tech industry has been a vital engine of growth and prosperity due in great part to Moore's Law--rapid improvements in computing power. But the tech industry will increasingly be driven by the growth of commuinication power, more than computing. It's the proliferation of bandwidth and new communicaitons services that will set the pace going forward. So what will that pace be? Computing was a very lightly regulated realm, and hence a fast grower, while telecommunications has been heavily, and insanely, regulated and hence has been very sluggish by comparison. As these two coverge, which regulatory regime will prevail? If the entrepreneurs had their way, telecom would become as free as computing. But alas the regulators, ever mindful of their source of power, inevitably, I fear, will have their way.

PUC to probe Net phone industry

California's Public Utilities Commission voted on Wednesday to investigate the emerging Internet telephone industry and determine whether it should be regulated like traditional phone companies and pay an array of fees.

History is not encouraging. When the railroads were the only significant form of interstate transporation, the Interstate Commerce Commision regulated the industry in the name of consumers--the argument being that the state needed to prevent the abuse of a monopoly. And yet, when the highways emerged as a viable competitor to the railways did the ICC pack up its bags and go home, saying "Our work is done here"? Hardly, they simply expanded their mandate to regulate trucking too.

This is an analog to what is happening now. Telecom regulation might have made sense when their was one national infrastructure. But now there is competition from the Internet, wireless, sattelite, cable, local, regional, and national wireline. Will the state PUC's and the FCC pack up their bags and go home? Don't count on it. All of this will be done in the name of the consumer, but don't buy a word of it. Innovation, choice, jobs, and prosperity will suffer, while regulators, and whichever special interest is most successful in lining their pockets, will "win." I wish I didn't feel so fatalistic about this.