Thursday, October 2, 2008

Whose Free Market?

Prompted by this post and the related article, I am kind of curious about something:

When people refer to the free market, whose free market is it? Is it free for companies and corporations, or free for consumers?

Clearly, the two have different interests, so it can't magically be free for both: Corporations want the most profit possible, and consumers (among other things) want to spend the least amount of money possible for goods and services. Those two priorities are in direct contradiction to each other. (Cue tortured wingnut logic that tries to explain how that isn't really so.)

So when crafting government regulation, where should the priority lie? As exemplified in the article linked to in the post, the so-called 'Google' position is that the most freedom should come at the consumer end, whereas the 'AT&T' position is more interested in seeing freedom for corporations to do what they want vis-a-vis telecommunications. The former position requires government regulation of telecommunications to achieve end-user equality, whereas the latter suggests that no regulation is best, even though that leaves companies free to create end-user inequities.

Another way of looking at what market is currently more free, from the article:

The country is now served almost entirely by three local phone, four cellular, and four cable companies.

Compare that to the number of software companies out there. Yes, there are behemoths and monoliths on the software side - Microsoft and Google probably being two of the most notable - but the barrier to entry for software is so small compared to telecommunications it's insane. The key about this is that it's not an accident. The software underlying the Internet is neutral and publicly accessible, and is only so because the US government regulated that in the early 1990s when it was developing the Internet in the first place.

End result: The structure of the Internet is regulated. This has resulted in awesome software innovation and innovation in how we use the internet. The telecommunications market is not as regulated, and has devolved into a few crappy, giant companies who now want to end the existing regulation regarding how consumers/end users use the internet, which will inevitably stifle innovation.(Imagine if you had to pay to use Facebook, not because Facebook wanted you to, but because Comcast would charge you for visiting That is precisely what the net neutrality debate is over.)

The other point about this I wanted to make is that Obama at least knows what he's talking about when it comes to tech policy. McCain's campaign has a bunch of people who have lobbied for Verizon or AT&T. I have a sneaking suspicion which will lead to a better policy, and ultimately end user, outcome.

My other rather strongly held opinion on this, of course, is that the Internet should be treated not as a market commodity, but as a public good. Changing that underlying assumption - which I think Obama's policy goals get at - would make a world of difference.


Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License.