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Cato Daily Dispatch for November 1, 2002

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Judge to Issue Microsoft Decision Today
State Grants Increasingly Helping Wealthy Students
Justice Dept. Files Suit to Block Satellite Merger

Judge to Issue Microsoft Decision Today

The Associated Press reports that a federal judge's long-awaited decision today in the Microsoft Corp. antitrust case could give new choices to computer users - or plunge the giant software maker into a lengthy period of creative hibernation.

Those are the opposite scenarios portrayed by Microsoft's rivals and company chairman Bill Gates.

U.S. District Judge Colleen Kollar-Kotelly said she will announce after the financial markets close whether she accepts or rejects a landmark antitrust settlement reached by Microsoft, the federal government and nine states. At the same time, she may say whether she endorses the harsher penalties pursued by nine other states who did not sign onto the deal.

Robert A. Levy, senior fellow in constitutional studies, released the following statement today: "No matter how Judge Kollar-Kotelly rules, the Microsoft antitrust case has produced nothing but losers. Shareholders, employees, consumers - there are no winners. If the Justice Department settlement is approved, Microsoft will have made more concessions than could possibly be justified by this lawsuit. In the meantime, consumers had to pick up the tab while high-tech executives spent their time currying favor with the politicians."

In "The Malign Nine vs. Microsoft," Levy challenges the nine states' cases against Microsoft and writes that antitrust remedies "must be crafted for the benefit of the public, not for the private gain of Microsoft's rivals." He quotes the Justice Department, which said that the relief sought by the non-settling states "may harm consumers, retard competition, chill innovation, or confound compliance" with the federal settlement.

State Grants Increasingly Helping Wealthy Students

Even though income is still a deciding factor in most financial aid awards, particularly federal grants, states and universities are increasingly helping students who were once too well off to qualify, The New York Times reports.

The percentage of students from families earning $100,000 or more who get state grants grew seven times faster than those earning less than $20,000 between 1992 and 2000, statistics from the federal Department of Education show. A decade ago, less than 2 percent of the highest-income families got state grants. That figure surpassed 5 percent by 2000, even before many states started giving grants based solely on academic performance, regardless of family income.

University grants to the highest-income students also grew twice as fast as awards to the lowest-income students in the same period, largely out of a recognition that college costs are so high that nearly everyone is feeling the strain. At the beginning of the 90's, fewer than 13 percent of families earning at least $100,000 got grants from the schools they attended. As of last year, more than 20 percent of them did.

David Salisbury, director of Cato's Center for Educational Freedom, had the following comments: "Traditionally, private as well as public colleges have awarded some portion of scholarships to students based on academic excellence. Excellence, however, meant something more than having a B average. Scholarship and grant programs would be much more effective and efficient if these were funded exclusively by private donors rather than by the state or federal government. People who donate personal funds to colleges for scholarships have an interest in assuring that their monies are well spent and that scholarships go either to academically deserving students or to students with honest financial need."

Justice Dept. Files Suit to Block Satellite Merger

The Justice Department filed suit yesterday to block the proposed $20 billion merger of satellite television rivals EchoStar Communications Corp. and Hughes Electronics Corp., saying the deal would create a monopoly that would eliminate competition for subscription television services in many rural areas, The Washington Post reports.

In October 2001, EchoStar, which owns Dish Network, with 7.5 million customers, proposed an acquisition of Hughes's DirecTV, the nation's leading home satellite provider, with 10 million customers. Hughes is a subsidiary of General Motors Corp., which sought to unload the satellite system. EchoStar chief executive Charles W. Ergen, who designed the deal, said a merged company would provide more robust competition to the cable industry.

The Justice Department's suit in U.S. District Court in Washington follows the Federal Communications Commission's decision last month to reject the merger, forcing the company to modify the deal in hopes of winning approval.

Adam Thierer and Wayne Crews, Cato's director of telecommunications studies and director of technology studies respectively, wrote in TechKnowledge about the merger and the FCC's case against it:

"It is becoming an all-too common feature of modern high-tech regulatory policy: If you feel you don't have the infrastructure necessary to compete against a rival, just petition regulators for access to your competitor's networks and technologies instead of building your own. The latest example of such infrastructure socialism comes from the field of direct broadcast satellite (DBS) where the two largest competitors in the industry, EchoStar Communications and DirecTV (owned by Hughes Electronics) have proposed to merge their systems into a single satellite constellation to serve American consumers."

Jonathan Block, editor, jblock@cato.org