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December 9, 2002
CONTACT: David Fish
(202) 289-8928

May to FCC: Allow EchoStar-DIRECTV Combo
Merger Would Benefit Consumers, Prove FCC 'Gets' Digital Rev.

WASHINGTON, D.C. - Does the FCC ‘get’ the digital revolution? Progress & Freedom Foundation Senior Fellow and Director of Communications Policy Studies Randolph J. May fears it may not, in light of its rejection of the EchoStar-DIRECTV merger. In an op-ed entitled Digital Marketplace Myopia published on Sunday, May argues the merger should be allowed to proceed. He contrasts FCC Chair Michael Powell’s pre-chairmanship position on such issues with the agency’s current “reluctance to relax its regulatory grip.”

The present scenario of the two companies volunteering concessions – spinning off satellite capacity to Cablevision – to obtain FCC reconsideration “is a prime example of the FCC’s continuing regulatory micromanagement in a dynamic industry undergoing rapid transformation,” May writes in the Washington Times.

These developments fly in the face of Powell’s earlier pronouncements: In 1998, May writes, Powell “urged that where another agency has overlapping jurisdiction the FCC should defer ‘rather than exercising our broad public interest jurisdiction’ because ‘it is a waste of time and resources for two agencies to regulate in exactly the same area’.” In fact, the FCC “spent 10 months largely duplicating the work of the Justice Department.” Moreover, the agency’s urge to stop the merger ignores the FCC’s own studies showing that satellites compete with cable, wireless cable and television broadcasters. According to May, the new company would control only 20 percent of what the FCC calls the multi-channel video market.

“You don’t have to look far into the future to see that the market…soon will come to be known as the ‘digital multi-channel market’,” he writes. “It will be a world in which video, voice, high-speed Internet access and data distribution most often will be bundled together in one package by companies competing over different technology platforms.”

The FCC must avoid “static market views” and “outmoded regulatory paradigms” and “standing in the way of business combinations which bring efficiency gains necessary to build out competing Information Age infrastructures” because such action will “do consumers more harm than good.”

The Progress & Freedom Foundation is a market-oriented think tank that promotes innovative policies for the digital age. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation