Yesterday the Brookings Institution hosted a forum on broadband. What stood out to me was a discussion by the panelists on the role the Federal Communications Commission should play in the evolving broadband industry. One role mentioned was that of consumer protection.
I don’t have a problem with the FCC being a clearing house of information. Consumers tend to make mistakes when they are not armed with information about the carriers they are negotiating with for service. The FCC can be a resource for information on service quality and pricing. Any consumer services beyond that would be a waste of resources.
There are a number of state consumer agencies that can address consumer complaints about communications services. Also, state courts can address contractual disputes between communications companies and consumers. There is no need for the FCC to go granular on consumer protection.
The FCC should devote its resources to the role it plays in regulating commerce. As guardian of spectrum, the FCC’s primary mission should be to ensure that spectrum gets into the hands of firms that can put it to best use. This does not include trying to ensure every little company gets to sit at the table. It also does not mean redistributing rents (profits) to company A from company B because some grass roots groups believe that company B should divest itself of some of its holdings in order to expand into new markets.
The FCC typically pursues divestiture during its review of mergers, but has yet to show how forcing a company to give up market share has done anything to increase consumer welfare. I agree with the panelists to the extent that the FCC has never made a strong qualitative or quantitative argument showing the benefits to consumers of divestiture. Merger reviews should be left exclusively to the United States Department of Justice.
While I have abandoned the theory of market failure as a reason for government intervention into what should be free markets, I can’t see how the FCC can claim it’s protecting consumers without demonstrating how consumer value is being increased by its actions. The FCC should not be attempting to create competitive markets using a merger review process that has not demonstrated any value to either broadband firms, shareholders, consumers, or the process for distributing spectrum.