The technology and telecommunications sectors of the Americaneconomy are increasingly under assault by politicians andregulators at all levels of government - local, state, federal, andinternational. Although the Telecommunications Act of 1996reflected a growing consensus that competition and deregulationwould bring tremendous benefits to consumers and entrepreneursalike, the Act not only fell well short of this goal, but hasactually resulted in increased micro-management of thecommunications industry. Worse yet, policymakers show an increasingwillingness to extend the misguided regulatory legacy of the pastto cover the Internet and other emerging technologies within theinformation services marketplace.
Policymakers must resist the urge to treat existing and emergingmarkets and technologies as their political playthings. Freshthinking is needed and this thinking should be guided by threesimple principles as policymakers consider how the Internet and thehigh-technology sector should be governed:
Principle #1 - First, Do No Harm: Justas this sound principle governs the medical profession, so tooshould such a "High-Tech Hippocratic Oath" guide publicpolicymakers. The pace of technological change in this sector makesit almost impossible to establish timely policies that won't beoutdated as soon as they are put into place. While bothentrepreneurs and industry giants can sometimes move at cyber-speedto avoid rapid technological obsolescence, it is apparent thatgovernments and legislatures cannot. That's the contrast between"Moore's Law" and "Murphy's Law."
Computer and communications firms have been forced to come toterms with the reality of "Moore's Law," which holds that thecomputing power doubles roughly every 18 months while its pricefalls by an equally dramatic margin over the same period. In otherwords, they have to reinvent the wheel every year-and-a-half ifthey want to stay on top of their game.
However, lawmaking is often beset by "Murphy's Law"- anythingthat can go wrong, will go wrong. Moreover, even the mostwell-intentioned efforts will likely take so long to move throughthe legislative "sausage factory" that most statutes or regulationswill be obsolete or redundant by the time they finally take effect.Put simply, "Internet time" and "Washington time" are measured bytwo very different clocks. Policymakers must avoid quick fixes andsupposedly simple political solutions to the complex problems posedby the realities of the new digital economy.
Principle #2 - Be Patient: The secondprinciple policymakers should heed when considering high-techpolicies is to exercise patience and regulatory restraint; to bewilling to wait for the good results they allegedly seek, todevelop naturally. This is not always easy in a town that believesthere is a short-term political solution to every problem. Manypoliticians provide lip service to the benefits of the market andself-regulation, but then act to subvert the will of companies andconsumers by imposing haphazard top-down regulatory solutions andprotectionist regulation.
Policymakers must avoid activism and recognize their ownignorance. They should not attempt to impose market structures ordetermine outcomes. Instead they should respect the naturaldiscovery process of the free market, and the spontaneous orderingof our fast-paced technological society. As these markets expand,evolve and mature, they will exceed any top-down creation ofpoliticians.
Principle #3 - Embrace Change:Finally, policymakers must embrace technological change and itsrevolutionary nature. Learning to live with change is never easy.Firms, technologies, even entire industry sectors can rise and fallin a very short period of time. One day, CB radio and 8-track tapesare the hottest technology in the land; the next, they are as datedas disco dancing and bell-bottoms.
But sometimes such failure is a good thing. Yesterday'sindustrial giant becomes today's also-ran. Whether it's IBM in the'70s or Microsoft in the '90s, no firm or technology can expect toremain king of the hill for long. In fact, if there's one constantin the Internet world, it's change. The New Economy ischaracterized by extreme volatility: the ongoing stock marketroller coaster; techno fads; rapid technological obsolescence; etc.In fact, tomorrow's Internet is not likely to be the Internet weknow today.
Consequently, policymakers must realize that the Internet andthe high-tech sector will challenge previous policies, existingprograms, older institutions, and well-established industries.Legislators must be willing to change existing structures, laws, orpolitical norms to accommodate or foster the ongoing expansion ofthe New Economy. While some Old Economy interests may not like theemergence of these new industry sectors and technologies,policymakers must not allow older companies to use old or new lawsand regulations as a tool against their new competitors. Thehistory of communications industry regulation is littered withlamentable tales of one industry sector using the club ofregulation to beat their competitors into submission. Policymakersmust reject such Luddite proposals.
These simple principles should guide any telecommunications ortechnology policy debates that arise. More specifically, theseprinciples can be translated into a more concrete set ofcommandments for policymakers to follow:
- Any individual or entity should be free to create and offer tothe public any technological good or communications service theywant, whenever they want, however they want, and on whatever termsthey and their customers find mutually agreeable.
- No individual or entity has a natural, inalienable right orentitlement to a specific technological good or telecommunicationsservice.
- Free speech rights and the First Amendment are of paramountimportance to individual liberty and should be fully honored andprotected against government interference.
- Rather than impose administrative rules, policymakers shouldrespect private property rights; unhindered freedom of contract;voluntary negotiations and standard-setting; private disputeresolution; other common law standards such as the law of trespassand torts; and the proper interpretation of the Commerce Clause ofthe Constitution as a guarantor of the free flow of interstatecommerce.
The Cato Institute's Tech Knowledge series ofcommentaries will seek to apply this libertarian framework to theexploding universe of high-technology policy issues in a consistentand ongoing manner.