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• Hazlett on Telecommunications
  

  Thomas Hazlett of George Mason University talks with EconTalk host Russ Roberts about a number of key issues in telecommunications and telecommunication policy including net neutrality, FCC policy, and the state of antitrust. Hazlett argues for an emergent, Hayekian approach to policy toward the internet rather than trying to design it from the top down and for an increased use of exchangeable property rights in allocating spectrum.

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  Readings and Links related to this podcast

  Podcast Readings

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  About this week's guest:
  • Thomas Hazlett's Home page
  About ideas and people mentioned in this podcast:
  Books:
  • The Google Story, by David Vise. Amazon.com.
  Articles:
  • "Telecommunications", by John Haring. Concise Encyclopedia of Economics.
  • "Ronald Coase". Biography. Concise Encyclopedia of Economics.
  • "The Federal Communications Commission", by Ronald Coase Journal of Law and Economics 2 (October, 1959): 1-40. [JSTOR, subscription required.]
  • "The Problem of Social Cost", by Ronald Coase. Journal of Law and Economics 3 (October, 1960): 1-44. [JSTOR, subscription required.]
  • "The Durable Internet: Preserving Network Neutrality without Regulation", by Timothy B. Lee, Cato Policy Analysis no. 626.
  • "Friedrich A. Hayek". Biography. Concise Encyclopedia of Economics.
  • "Internet", by Stan Liebowitz. Concise Encyclopedia of Economics.
  • "Tragedy of the Commons", by Garrett Hardin. Concise Encyclopedia of Economics.
  • "A Marvel of Cooperation: How Order Emerges without a Conscious Planner", by Russ Roberts. Feb. 7, 2005, Library of Economics and Liberty.
  Podcasts and Blogs:
  • Net Neutrality: What's a Libertarian to Do?, by Eric S. Raymond. Armed and Dangerous, November 13, 2008.
  • Yandle on the Tragedy of the Commons and the Implications for Environmental Regulation. EconTalk podcast.
  • Don Boudreaux on Market Failure, Government Failure and the Economics of Antitrust Regulation. EconTalk podcast.
  • Private vs. Public Risk-Taking, with Mike Munger. EconTalk podcast.

  Highlights

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  Podcast Highlights

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  0:36Intro. Telecommunications. What is net neutrality? Many flavors of proposed legislation. Argument is made that the Internet has been created according to particular blueprints of architectural design, basically separating the edge of the network where applications are provided to end users from the core of the network, an interconnected layer of networks. Argument is that this has worked well, allowing inventors to supply new applications without reinventing the wheel, supplying their own delivery network. Extended to say that this structure is endangered by the emergence of large network providers--e.g., AT&T, Comcast, Verizon--which have constructed considerable infrastructure to bring the net to small businesses and households. If left to their own devices they may close off access. To protect the vertical integration, regulation is needed. That's the argument in favor of the idea that certain providers should not be able to restrict certain kinds of access. Many complications. 4:40Counterargument: Internet was not invented according to blueprints but evolved spontaneously. Networks build infrastructure because they own them and can charge market prices. Data: Those networks interconnect not because of any mandate but because a spontaneous system evolved. Marvel of spontaneous market structure. Large degree of specialization. Transport networks tend not to get heavily involved with content. Regulatory structure has been minimal, markets open in the sense of less regulated. Many "violations" of net neutrality--that is, network providers often do stick their fingers into the services their customers receive. Valuable services--malware, spam filtering. Economies of scale and efficiencies. Other examples: vertical integration of a company like Google, that maintains its own physical transport network--lightning fast. Globally constructed on dedicated bandwidth that is owned by Google, even though they are a content provider. Edge of the network. Own the innards of the transportation system over which their information travels, as well as multiple computing farms, proprietary. Important deals cut by Google with Internet service providers; according to Vise biography of the company, May 2002, Google paid cash and warrants to AOL, which at the time was one of the dominant service providers in the United States. Google Search Engine to pop up versus Yahoo. Expensive, risky but they paid. Direct violation of classic net neutrality. Network could charge content provider to have preferential treatment on the startup date. Wireless ISP, Clearwire, attempting to bring wireless broadband to the public. Google gets preferential treatment on the Motorola handset used. Both transportation and content bundled, vertically integrated. At a high level Google argues for net neutrality--leading visible corporate champion. 13:09Challenge is to think broadly about competition. Tendency to forget that competition is a rich term. Each iteration of success alarms people. When IBM was biggest competitive threat with dominant market share of computer business, it turned out that the mainframe business was overtaken by desktop computers, and then Microsoft. Now people worry about Google being the behemoth. Mon