News Releases
News Coverage
News Media
PFF Highlights
News Release
CONTACT: Patrick Ross
May 5, 2005
(202) 289-8928

Regulators Must Treat 'Parity'
Calls with Caution
Gifford, Dixon Offer Principles for Policymakers

WASHINGTON D.C. - The convergence of markets in the digital age is placing policymakers under increasing pressure to extend regulations borne by incumbents to new entrants, note Progress & Freedom Foundation President Ray Gifford and Senior Fellow Kyle Dixon. In "Progress, Freedom and Regulatory Transcendence: Video Service Debate Illustrates Importance of Core Regulatory Principles," the authors note that cable companies are requesting that video service obligations such as anti-redlining rules be applied to new entrants, including telephone companies.

"All this lobbying does little to help determine what's best for consumers," argue the authors. Noting a long history of "regulate my new competitors like me" in the telecom space, Gifford and Dixon offer four principles policymakers should use when being lobbied with such arguments.

  1. Policymakers shouldn't consider equal regulatory treatment appeals in isolation. "These approaches say nothing about whether the rules in question do more harm than good, especially in the long run."
  2. Policymakers should avoid imposing rules where market forces can achieve the same result. "Companies' pleas to 'regulate unto others but not unto me' can induce lobbying fatigue and thereby distract policymakers from a simple truth: the same technological developments that brought another round of lobbyists to their offices also increase the potential for competition."
  3. Policymakers should respect the role of property rights. "Consumers win as their choice of offerings expands. Companies will be reluctant to provide these choices, however, if government requires or allows the fruits of their labors to be taken unfairly or without adequate compensation. This is true whether it is an uneconomic build-out requirement or an uneconomic forced access policy."
  4. Policymakers should know "taxation by regulation" can't be sustained in a competitive environment. "Much of the wrangling over regulatory parity involves the past requirements of taxation by regulation being carried forward into a converging, competitive world. While some of these requirements may be a legacy millstone around incumbents' necks, the answer is not to try to impose the same burdens on new entrants. There should be an imperative to remove the millstone from incumbents; it should be done by regulating all parties down to parity."

"These orgies of influence are certain to erupt more frequently as platforms converge to allow more and more companies to compete with each other," Gifford and Dixon write. There are no obvious good guys or bad guys, they say, just companies acting in their self-interest in a competitive marketplace as predicted in public choice theory. "If applied in a balanced way, probing deeply into the relevant facts, these principles at least can help policymakers transcend parties' convenient positions and empty slogans to dwell on matters more central to responsible policymaking."

"The final metric has to be what is best for consumers," argue Gifford and Dixon.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation