There was a reversal in American politics during the 20th century. Democrats went from Woodrow Wilson's racism to Bill Clinton's liberalism. Republicans went from being the Party of Lincoln to the Party of Reagan.
We may be seeing a second reversal here in the early 21st century. Republicans who once preached deregulation are now micro-managing the market and defying science. Democrats who urged regulation are now calling for it to end and embracing technology.
The reasons for this reversal come down to money and power Republicans see money as fueling their power. Democrats are stuck relying on bits. But bits can set you free.
Bob Frankston's latest essay, called "Reality vs Regulation," illustrates this profound shift. Copyright and telecomm businesses threatened by rapid change have gone to Washington, campaign contributions in hand, to halt technology in its tracks. Moore's Laws of fiber, storage and radios, on the other hand, have moved us from an age of information scarcity to one of abundance.
Until this week, however, the rhetoric had not decisively shifted. Republican regulators still pretended to be in the deregulation business. Democrats were calling mainly for different regulations, not deregulation.
SBC CEO Ed Whitacre (left) and the Congress have now made this decisive shift in rhetoric, from deregulating to micro-managing the technology marketplace.
I've talked before of Whitacre's call to end "network neutrality" and charge rents to Web sites for carriage to customers (thus making clear that the only folks who can speak online will be those who can afford to be heard). To that should be added the move to "close the analog hole" and "reinstitute the broadcast flag" in Congress, an attempt to guarantee that only those who pay will be able to read, see, or hear what they wish.
There's an Orwellian synergy here -- no talking without paying, no hearing without paying, all in the name of freedom. Some pigs, indeed, are more equal than others.
Unfortunately for both Whitacre and the major movie studios, they have invested heavily in sand. Politicians don't stay bought in part because voters continually recycle them. And for reasons unrelated to any of these issues, we seem on the verge of recycling plenty. With both the market and technology now being pushed to the other side of the political see-saw, a deregulatory revolution is coming.
If you own any SBC stock, and have a medium-to-long term time horizon, I suggest you might want to sell.
Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Jesse Kopelman on November 3, 2005 12:57 PM writes...
I don't know if talking about charging rent is really apt. I think it is more like charging a toll or tarif. What's interesting is this is really a form of double dipping. SBC and others are already getting money off of the the user side of the connection. Now, they want to get money off of both sides. This seems to me a sensible strategy only if the user end contines to fall in price, as the whole reason people are willing to pay $40+ for a broadband connection is because most of the content and services are free or very low priced once they are connected. The problem with this argument is that it becomes less and less expensive to provide the broadband connection, so that it is possible to maintain margins even in the face of falling prices and thus the argument that double dipping is needed to sustain profitability becomes invalid.
Permalink to Comment2. Brad Hutchings on November 3, 2005 04:19 PM writes...
The question is not which half of the Republicrat Party is going to push for more government regulation of already regulated channels. It's about what technology will come along to create a new channel not subject to government regulation, but which reaches a true market balance between what people want to do with content and what content providers need from distribution systems in order to want to supply them with content.
While the pols argue over the broadcast flag, Apple rolls out commercial free episodes of Deparate Housewives. Heck, that's how I watch Nightstalker now and the only reason I even got interested in it. The ability to create such systems relies on the DMCA as it was intended (i.e. not for pretecting ink markets and for giving legal standing to user-friendly DRM systems). Several such marketplaces have arisen in music (Napster, Yahoo!, etc.) although Apple has been most dominant by providing a fair end-to-end solution. I think what you're really seeing is the politics getting so thick because the stakes are so low. Private distribution chains like Apple's iTMS/iPod system or XM radio will replace regulated broadcast radio/TV, and the attempt to convert over to HDTV will speed up the change.
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