Umair Haque / Bubblegeneration
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Tuesday, June 08, 2004


Unintended Consequences

Declan says we should abolish the FCC.

And he makes a (bit of a misguided) economic argument.

Dear Declan,

If you privatize the FCC, you will end up with a series of natural monopolists controlling technologically relevant bits of the spectrum. There will be huge gains to 'society' - but these gains will be appropriated by the monopolist.

Sounds great in theory, consider it in practice via a greatly simplified thought exercise: the first player to monopolize any spectrum frequency and make more $$ than his rivals will be able to buy them out, extending his control over the spectrum...which will give him a greater advantage, enabling him to buy out still more rivals - this competitive dynamic ends with a single total spectrum monopolist, because there are increasing returns to scale in media industries (via advertising, publishing, marketing, etc).

What you really want is an American Beeb - because the Beeb fights the natural monopolistic economics of (nearly) all one-to-many networks by setting a bar for competition among different networks. The BBC acts like a magnet, counteracting the force of increasing returns, which is pulling in it's own direction: towards natural monopoly.

That means natural monopolists can't get away with the things they can in the US. To use some examples that highlight differences in the radio market between the US and the UK - Clear Channel's 'ghost' DJ's, embedded 'journalism', 25 hours of ad-time per hour. These are a few of the very tiny effects of the Beeb's competition-enhancing force on the entire media landscape across Europe.

By abolishing the FCC, you'll end with Microsoft Radio - which, I think, is not what you really want.


-- umair // 12:12 PM // 0 comments


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