 Welcome to Free Thoughts. I'm Trevor Burris. And I'm Aaron Powell. Joining us today is Thomas Winslow-Haslet, who holds the H.H. Macaulay Endowed Professorship in Economics at Clemson University, where he also directs the Information Economy Project. He's also a former chief economist for the Federal Communications Commission, which is relevant to the topic of today's podcast, which is his new book, The Political Spectrum, the tumultuous liberation of wireless technology from Herbert Hoover to the smartphone. Welcome to Free Thoughts. Thanks for having me. I'm going to give you a loaded question to begin with, and you can fill in the blanks. Why is television such a vast wasteland? Well, it was regulated that way. That is to say that early on, there was a lot of excitement in the 1940s, early 50s. And in fact, even just using experimental licenses issued early on from the late 1930s, there were four emergent national television networks. And when licenses were issued in the TV allocation table of 1952, however, there were only enough slots assigned so that we could have three national television networks. And so we actually killed off the Dumont network. And it was, you know, by regulatory design, intentional or unintentional, certainly Dumont, it was a great entrepreneur in the television industry, both making sets and in innovative programming. He screamed bloody murder and said, no, you're going to kill us. And certainly by 1955, they were dead. CBS actually put together a plan that was very good for the top two, two and a half networks, NBC ABC and CBS ABC being the half and left no room for a fourth competitor. And then that system actually survives all the way until the deregulation of cable. Cable was actually suppressed in the 60s and 70s, even though it would bring the competition that had been foreclosed in the 60s. It was actually suppressed to protect broadcasting. So you don't get the flowering of the video market really until the 1980s, 1990s then with cable TV. And of course today that's run right into the internet in a much less regulated mode. I just want to follow the phrase though, the fast wasteland comes from who? I wrote a paper on public broadcasting a while back and I knew about this famous speech and what he, he really, the man who said this, he continued to believe this for his whole life, it seemed like. Well, he's still here. Oh, he is. Okay. Yeah. And Newton Minow is still dining out on the most famous speech ever given by any American regulator, I assert, May 9th, 1961, Las Vegas, Nevada, National Association of Broadcasters, the assembled executives of the television industry, the chairman of the regulatory agency faces them down and challenges them saying, I dare you to sit down in front of a TV set and watch your product for an entire day. You'll see just an unending parade of gibberish and you have produced, I'm sorry to say, the vast wasteland. He blamed them and he said very specifically he was the new sheriff in town and there would be consequences. Specifically there would be new forms, new forms to fill out for renewals to use the public's resources but when he got back to Washington, in fact there were no new forms. In fact, what the FCC did is it moved to suppress the competitive medium, then emerging cable TV and carry the water for the incumbent broadcast television industry. So while they were publicly hectoring cable TV and blaming the private, excuse me, broadcast television and blaming the marketplace for the vast wasteland, they were creating it, producing it and cutting deals with broadcasters in the public interest. So what was his specific gripe about the content of this wasteland and when he's saying you're going to fill out new forms, what kind of content was he hoping they would be putting out instead? Well, educational, public affairs, information. He hated the sitcoms, the westerns, the cop shows and pretty much everything it sounds like. The senseless comedies, the car chases and the commercials, certainly the endless parade of commercials. So it was a criticism of a market that was created by the restrictions of regulation in essence and policy makers were blocking the emergence of the world of tomorrow. Now today is the golden age, by the way, for television. Everybody knows this because why? We've had an enormous deregulation. The licensed system of broadcasting from the 50s, 60s and 70s is gone. It's supplanted and displaced by the disruptive technology, first of cable, unregulated, unlicensed and not in the public interest. And now that's gone in, of course, to over the top, provided largely over cable TV systems, now with competing telephone company DSL and Fiber to the Home competitors and wireless. But deregulated system has an abundance of competition and we get lots of informational programming. Everything from C-SPAN on the one side to BBC America on the other. And of course, podcasts and the net. This is all the product of deregulation. Well, let me ask, you mentioned BBC. I mean, that seems like almost a counter example to this wasteland being a product of regulation because, yes, the American TV was creating lots of junk or it wasn't creating the kind of stuff that he wanted. But the BBC has always been very limited. It's, I mean, it's the government's TV stations, but it seems to produce relatively high quality content, both of an educational sort and of, you know, prestige drama and whatnot. Why didn't the market lead to bad TV there in that heavily regulated system? Well, it did lead to bad TV in England, just not in that dimension. Yeah, it was a very elite product and it really was a very little interest to the average viewer. And so, yeah, if you spend enough money and have resources and hire people from Cambridge and Oxford, you can do some very interesting program and it does well. It doesn't dominate the United States, but it does well in a competitive market. BBC America and the international British broadcasting radio service is very competitive. And thank goodness for that choice here. Of course, in England, they didn't have a choice and they suppressed rock and roll music, for example, for decades or, you know, famous story of the pirate ships broadcasting offshore to try to give British radio listeners what they wanted blocked by the BBC. And in possibly the worst blunder in the history of regulation, they suppressed Winston Churchill from challenging the other Conservative Party members in the 1930s on the question of Hitler and the Munich agreement and Neville Chamberlain. And they literally suppressed free speech through the use of a government monopoly broadcasting agency. So the consequences of that were substantial. Let's just put it mildly. And really, from a civil libertarian standpoint, from a pro-competitive economic welfare standpoint, you're not getting really the value out of broadcasting in England that people deserve. Now, there has been considerable deregulation in England, in Europe, and so forth. A lot of it coming in, again, through new technology, specifically satellite television, which is their sort of version of cable. Now, BBC and a lot of these state-owned places represent the way that these governments kind of could take two different paths when the wireless spectrum came out. It was either, it seemed that everyone kind of thought it was a public good. It was either going to have the government own everything or license the spectrum. And we went with the licensing of the spectrum. Can you talk a little bit about sort of that before 1927 radio days, which if you read Supreme Court of Pines and I'm a lawyer, so I read my red line and things like this, where it was complete chaos and everyone was just trotting on everyone else's frequency and someone had to come in and fix that. That's the story we've heard. Yeah, that's one of the most fascinating nuggets. And historically speaking, I call it, I have a chapter called Myth Creation, Myth Calculation. And so what happens in the 1920s, very interesting. First of all, radio, as a practical method for communicating, really pops in in the 1890s with Guillermo Marconi, Nikola Tesla. And it's great, wireless communication, taking away the wire. Boy, that's that really helps communications. And there's not much of an issue because there's no use of the technology. Radios are basically sold in pairs. People are communicating point to point like walkie-talkies. Yeah. And newspapers instantly grab that technology. In fact, traders on Wall Street wanted wireless coming in from London market so that they could get ahead and make arbitrage deals in New York. So anyway, there are very specific uses. And all the way through World War One, it's kind of a boutique enterprise. What changes in 1920 is a business model. Broadcasting. Broadcasting is actually an agricultural term. You're not planting the seeds specifically. You're just broadcasting. And that's what this new technology did. It was one to many, not point to point. And it just instantly, I mean, November 2nd, 1920 is the birth of broadcasting by most historical accounts. KDKA and Pittsburgh broadcasts, by the way, the political results, the 1920 election. And within two years, there are 500 American broadcasters. The business model just takes over. Now there's interference. There's a conflict. Now there's a reason for some rules about who can access radio spectrum. So it's not a boutique enterprise anymore. It's a marketplace that does need some coordination. The initial response was vested in the U.S. Department of Commerce because in a 1912 statute, immediately following the Titanic disaster, the Radio Act of 1912, there actually is a jurisdiction here for the Department of Commerce to issue licenses so as to minimize interference. And the Department of Commerce is headed in 1921 by Herbert Hoover, a very up-to-date, technologically speaking, engineer, educated at Stanford University and a very successful engineer in the private marketplace who instantly latches onto the technology, meets with the radio industry, starts sponsoring annual radio conferences and a regime develops, first come, first serve, common law property rights, priority in use, right of user, adverse possession. It has different names depending upon the legal context, but it's a very well-known principle of property that if you as an entrepreneur make use of some resource and do something valuable for society, that there's a protection in the law that is potential to you on a claim for your vested interest. And in fact, the Department of Commerce is an agency that's charged with enforcing these rights and they do, and they say explicitly, we're going to allocate these AM radio frequencies on the basis of priority and time. If you're there first, it belongs to you, somebody might want to come in, they can either buy your station and the frequency rights or they can negotiate for a time-sharing, a lot of time-sharing. So there actually is a property system and that's when radio develops. Okay, this is a killer application, the first, of course, in electronic communications. This is where millions of households by 1926 are buying very expensive, I should say radio consoles to receive these signals. I mean, they're about $1,500 in today's dollars, okay, for these big radio sets. And the market is developing. 1924 is called Radio Christmas. Madison Avenue gets ahold of this. This is gripping the zeitgeist. This is a big deal. But what happens is there's a political coalition that develops to truncate entry. That is to say the incumbent radio broadcasters, the big ones, commercial stations, they wanted to have a mechanism to deny new participation in the market, competition. The regulators, senators, Hoover at commerce, the White House, they want some control mechanism. They want to be able to influence, they know this is a very influential medium of public opinion coming in. They want to have some jurisdiction. They want to, so the licensing idea catches on under a public interest standard that's actually created and written and suggested and pushed and lobbied by the National Association of Broadcasters, the Incumbents Trade Association forms in 1925. Anyway, so by 1927, they've got the law signed by Coolidge, the brainchild of Herbert Hoover, and proposed by a bipartisan coalition in Congress that wanted some governmental control over the content. And that's what we got. We didn't need it for the chaos because there wasn't chaos. There was a, in fact, as the, as the Federal Radio Commission wrote in 1927, there was five years of orderly development, 1921 to 26. Now there was a shift in the market. And in fact, we got a new law with what is called a public interest standard. That means a regulatory agency. First, the Federal Radio Commission changed in 1934 without any substantial movement in the jurisdiction towards, to what we have today, the Federal Communications Commission. That, that agency, members nominated by the president, confirmed by the Senate, they make a judgment on what a particular band of spectrum should be used for, the technologies deployed, even the business models. And then they assign the rights to particular parties that they think are worthy of the, of the valuable right they're by bestowed. Given that spectrum is, to some extent, rival risks, we can't both broadcast on the same frequency. This, as, as the number of radio stations exploded, I'm just curious how many radio stations could have realistically been in operation in this, in this system of, of market-based property? Like were we, were in danger of bumping up against a reasonable cap at the time? Yeah. So this is a great question. And in fact, you know, what Trevor said before is, apropos, the courts look at this, Supreme Court cases in 1943, the NBC case, 1969, the Red Lion. It becomes accepted doctrine, some might call it dogma, that there were only a finite number of stations. I mean, the Supreme Court language is clear on this. You know, there's a physical scarcity. Only so many stations can go on the air at the same time. And it turns out to be an incorrect assertion. I always say, OK, well, what's the number? If there's a physical limit, you tell me the number. And whatever the number is, I'll just divide it by two and say, let's just cut them in half, meaning time-sharing agreements. OK, they're all, or, or just different distributions of the ownership. Just have two parties jointly own the same facility. Now, you say, well, that's cheating. No, it's not. These are the, the kinds of ways the spectrum is divided. There's always lower power. There's always better technology. You spend more on the receiver and the transmitter. You get more stations. There is no physical limit. Now, there are conflicts. And what you said before about, well, you know, to, to say stations can't broadcast on the same frequency. Well, yes and no. I mean, there are ways to divide the frequencies. I mean, satellite radio gives you about 200 stations in a space that is not supposed to be able to give you 200 stations. They do it, you know, by certain efficiencies and economies and, and spending money on satellite transmission and the receivers and so forth. And so it's all economics is what it comes down to. Yes, you can have more, but it's going to cost you something. There are costs to doing this. And this is what Ronald Coase, the great economist, the late great economist who ended up basically winning a Nobel Prize for his discoveries, thinking about radio spectrum and how property rights and rules of the road are fashioned. What we like about competitive markets is that you, if you have ownership rights that enable people to compete and provide services for customers and profit thereby, they tend to really get good information and make careful judgments about the trade-offs. Do we want our customers to have to spend ten dollars more for a receiver to give them a little bit more diversity or higher quality, higher fidelity? What are these trade-offs? Should the government mandate it? Well, yes, under Herbert Herber's system, 1927, the one we still live under in, in, in, in broad structural respects today in terms of the legal regime. Yeah, the government does decide that. And so they make endemic mistakes even if they're perfectly right at one point in time. Of course they have to be wrong tomorrow because the, the dynamics of the market, the technologies change. We, we find out more about consumer demand every day and we, we find about new business models, experimentation, and market progress. But yes, if we have the old rules in place, there are limits there and you can't roll over into a new technology. So, as we sit here today, this is 2018, right? 1952, we had the TV allocation table for the great new killer app of the day, broadcast television. It was thought to be a wonderful way to deliver I Love Lucy. And guess what? We still have it. We still have bandwidth allocated as if we're delivering I Love Lucy with terrestrial television broadcast. If I ask my teenage daughters, did you watch television today? They'll say, oh yeah, yeah, I was, I was, I was binge watching Gilmore Girls. Okay, they, they don't, it's not television per se. It's different. I mean, it is, it's a screen, yeah, it's a screen, but it's not over the air. In fact, they're right and the FCC is wrong. Yeah. Okay, the FCC still thinks it's I Love Lucy from a broadcast antenna. And in fact, the market abandoned that, you know, a generation ago to go to cable. Then of course, we went to satellite as a, as a, you know, two national footprints for that in terms of how you get your video. And now that's all passé with over the top. And in fact, the networks that give us over the top, in many cases are wireless, they would love more bandwidth. They would love to have higher definition and lower prices for a bigger market. And if their input costs were left, if their spectrum costs, if they could get their hands on more bandwidth, that market would develop. It's literally blocked by the 1952 TV allocation table. So those, those are the kinds of trade-offs that the, the regulatory process, it's not the bureaucrats. It's not, it's not the rate. A lot of the regulators are very hip to this. And of course, I've have argued, you know, I worked at the FCC. I understand. I learned a lot from, from engineers, lawyers, and economists at the agency. And this is true around the world. They'll, they'll, they'll get together and say, how do we, how do we change this? We're, we're, we're boxed in by the politics. We're boxed in by the legal constraints. And, and indeed they are. So we just adopted a system, the Herbert Hoover system, that turned out not to be friendly to science, technology, and progress. And we get locked in so easily. The, the hard part of the book, if I could just say, is actually getting the arc because there is a switch. We have, the reason we're sitting here thinking, wow, wireless is amazing. Why are they talking about how, how terrible are, yeah, you're right. Wireless is amazing when you unleash it. And I talked about the cable television deregulation, which literally happens in the mid to late 1970s. And then the over-the-top internet environment comes in without the public interest licensing. So you, you see what's possible in terms of the huge diversity relative to the, the big three, the vast wasteland. Then in, in spectrum policy per se, when you're actually talking about allocating airway rights, we, we, we started about the same time, the 1970s and 80s, to finally get to the mobile market. And the mobile market was key not just in, in what it represented in terms of the technology. By the way, cellular technology, 1945, Bell Labs. Yeah, I couldn't believe that from the book, they, they was proposed. Cover story in the centered evening post, interview with the FCC chair. Well, we'll get the licenses out in a couple years. That's not an issue. Well, it takes until the 80s. But what really happens then is with cellular, you get away from some of the politics of broadcasting. And the licenses are just relaxed, liberalized and even competitive where the licenseeed is not locked into a business model or a technology or a particular service. By the way, on your cell phone today, you'd be shocked and amazed to know that there's never been in the United States a rule about going from voice to text to internet access data. That's just liberalization, leaving it to the market to figure out what the services are. That is radically different than in 1927 or 1934 when any new technology had to ask permission. The FCC chairs have called it mother may I. Okay. Oh, I have a new service. Can I provide it under a service authorized for voice? It's called data. Why does the government have to decide that? Why not let these trade offs be, you know, because obviously there's an interference issue. You can put data over. The voice calls are going to have, have, have an interference issue in spectrum space. So you let the market figure, you, you, you put spectrum out in the hands of competitive carriers or anybody else, call them a non-carrier, call them an un-carrier. And you let consumers decide among them by their patronage. It sounds sort of like capitalism. We have some experience with this. Kos was amazed that we hadn't thought of this before. He wrote in 1959 on the topic, said, you know, the price system works so well, so why not let it work here? Well, he was a visionary at the time and they thought they, they really made quite, you know, they went to, he went, actually he went to the FCC and he gave testimony on this. They asked him, you know, you're an economist. What does this big idea have, you know, for having the price system? And, and the first question, the actual, the first words of the first commissioner ask a question, tell us, Professor Kos, are you spoofing us? Is this all a big joke? You know, they, they thought he was off the wall with this, but it turns out that in the 70s and 80s in the U.S. and in fact around the world, there was a move to liberalization. Just put out some, some ownership rights, de facto, don't even call it private property, but just liberalize these old licenses. Don't specify what can be done. Let the licensee figure out what the service and the technology and the business model look like and we'll step back. We'll delegate that to the market. Let's see how that works. Well, guess what? It's 2018 and it's off the charts. The idea that you go to the App Store or Google Place and there are over a million apps, a million. These are wireless apps. All of them, all of them interfere with one another. Okay, I'm talking about Angry Birds versus Spotify versus your favorite cat videos on YouTube. All that stuff interferes and it's, it's, it's, it's damaging, it's dangerous, it's, it's chaotic, but it's all managed by the technology on the one side, the pricing on the other, and the carriers compete to provide services that actually host those platforms. That level of complication is completely unfathomable under the old Herbert Hoover system of Mother Mayer where the government actually has to select how the spectrum is used. And that liberalization from essentially the 70s to the current, that has unleashed a whole universe. And so you have sectors now. I took a lift to Cato just now. Lift and Uber are impossible to think of without liberalization of spectrum. And by the way, when people talk about lift and Uber, nobody talks about spectrum. That's the sign of success. It is totally background noise. It has created a platform and a universe, a wireless universe, a way of living, a way of communicating that now builds on itself in a virtuous circle, you know, an ecosystem of innovation that has left the old world behind. And the challenge now is to clean up, to take those lessons and clean up that 1927 radio regime and apply it to the 21st century. That is to, even even as we speak, and we've learned these things, maybe 20% of the really valuable, utilizable spectrum for communications, maybe 20% has been liberalized. And vast chunks are still allocated the old way, like in the broadcast TV table. Yeah, they love, they gave a lot of spectrum for broadcast television. And they've, you know, they've left, they've left about half of it there. And then a lot of it's allocated to the Department of Defense or the U.S. Forestry Department, you know, in downtown New York City. And we need mechanisms that liberate that spectrum and get more of it out there so that we can have all these applications multiplied by orders of magnitude. And with the 5G world that's coming in, you know, the next generation of wireless fifth generation, there's a lot of excitement about it, but it needs spectrum and it'll do better with more spectrum. It'll go faster. Your connections will be speedier and your quality of service will be much higher. So that's the challenge now, and I talk a lot about it in the book, you know, how we can liberalize the process of liberalization, speeding the future, and we've learned from the lessons of the past. Yeah, on that, one of my favorite stories you tell in the book, there's a lot of really crazy stories. I'm always surprised when I'm surprised how bad the government was, because I'm a libertarian, I spent the government to be bad, but there were times in your book where I said, really? Including W-E-V-D, that story. What was W-E-V-D? Well, Eugene V. Debs, the famous socialist and a group of socialists in his honor, just after he died, I believe, bought a radio station and it's very interesting. This is prior to 1927, and this is in the chaotic days when supposedly there was a tragedy of the commons and so forth and so on. In fact, there were property rights, as I said, enforced first come first serve by the Department of Commerce, and so the socialists in New York did get together and bought this station, and they were broadcasting, you know, socialist leaning programming content. And as you think would, you know, be part of the mix in a country protected by a First Amendment and free speech. Well, the Federal Radio Commission takes over and now we have public interest licensing. Public interest convenience and necessity. Yeah, the standard is public interest convenience and necessity. In other places it appears as public convenience interest or necessity, but it doesn't make any difference to the words changed, because they don't mean anything anyway. They just mean what the government wants to do, and of course you need a documentary record. You need sort of a pile of paper. We looked at this, we had hearings, we had experts tell us what to do. Okay, so it's a basically administrative procedure. Anyway, the government goes on this licensing, you know, under the 1927 Radio Act, the Federal Radio Commission is now looking at stations and thinking about renewals and they look at WEVD and they notice the programming. Now what does that have to do with interfering with other stations? To figure out which station should be allowed to take up valuable space and which should not. You need to trade, you need to look at trade-offs, and in fact the courts approve this, much to my amazement. Now I wasn't around exactly then, but if I had been there, you might have been amazed too. But the WEVD comes up and you know, and this is a Republican FRC, the Federal Radio Commission, and they, you know, they see the socialist stuff on there, and they say, this is a propaganda station. That's the term they use, propaganda. And they said, you're a mouthpiece. That's another term they use, not a term of endearment. They said, actually they said they didn't want to be judgmental when they said it, but they said it was a mouthpiece, and you know, you're a mouthpiece for the socialist party. And that's not right because these are public airwaves. Now of course other commercial stations had, you know, commercially successful programming, and they weren't a mouth. That was sort of the standard, the commercial standard. You know, don't be too heterodox. Okay, so they were warned, and in fact they, they suffered. They had to curtail a lot of that program and just to maintain their license, they were warned. By the way, WCFL, Chicago Federation of Labor, same thing in Chicago, and they both backed off. The thing I like about WCFL is eventually got completely, and finally made a deal with NBC for programming, the big commercial network. It's time was not going to pro-labor union causes anymore, and they end up being, the whole station ended up being sold to Amway. I'm not making that up. Amway is where the Chicago Federation of Labor, another decidedly left-wing propaganda station, according to the Federal Radio Commission, ends up. And anyway, WVD, it ends up basically the same fate. They have to get out of the propaganda business, meaning the political controversy business. That's what the regulations did. That's where your public interest led. And it is amazing to see people today who call themselves progressive, saying that we need more public interest regulation of the Airways. That is interesting. So that's the, I mean, it sounds like the Fairness Doctrine too. Yeah, well, I love that one because, you know, as an economist, I always like to correct the lawyers, and the lawyers always say, oh, the Fairness Doctrine dates to 1948 when we had this Fairness Doctrine policy for television. Well, it turns out in 1929, as soon as the Federal Radio Commission kicks in and does these renewals, they craft a, they didn't call it the Fairness Doctrine, but it's the same thing. And they look at the stations and say, are you really presenting important things that are of interest to everyone and not just your own narrow focus? Again, mouthpiece, propaganda, that stuff comes up when there's decided controversy. And so they go after conservatives a little bit. They go after the socialists, you know, quite obviously, because these people just stick out on the horizon. Their heads are up. And there's some great stories historically about people who have been silenced. I say great in the sense of, wow, that didn't work very well. Let's agree on that, particularly civil libertarians, no question. It's a problem. And the public interest ends up in this vast wasteland, as pronounced by the regulators themselves. Now, of course, when they're pushing this to the market, as though it's private markets doing it, that is fanciful. In fact, not only is it this funneling, a very narrow channel, that there can only be national television networks. And they're limiting, of course, voices on over the air as well for radio. But they're doing this quite with the acceptance, and in fact, constructive engagement, shall we say, of the radio industry and the radio, which became, by the way, the television incumbents right after in the late 40s, early 50s. So, yeah, there's this conspiracy of interest between powerful private sector players and policymakers. And it's crafted with this vague standard under the public interest. It was quite obvious. And in fact, there's a wonderful book written by the author of the 1927 Radio Act was Clarence C. Dill, a Democrat senator from the state of Washington. And he wrote a wonderful book called Radio Law, when he left the Senate in 1937. And he said it was the vaguest standard we could craft that would pass constitutional mustard. That the courts would let us make these judgments and trade-offs. We had to have a standard, and that was what we picked. And in fact, he says it came from the National Association of Broadcasters. They gave us the language. And so we wanted to control this medium of expression to some degree. And that was the degree we could control it, to have these kind of a weak standard with political judgments about who could broadcast and what they could do. How did they go to war against, like your story about the cable, which I can't remember, someplace in Pennsylvania, like how the guy first created cable. My mom grew up in the 50s in rural Oklahoma, and she only had cable for this reason. But the broadcasters seemed to have, they weren't totally into this cable stuff for quite a while. And then for some reason, UHF keeps coming up all the time. They could bring up, UHF is a prominent figure in this story where they want UHF channels or trying to get more UHF channels. So how does the war against cable kind of start, and where does it end up? So I talked a little bit about the 1952 TV Allocation Table and Dumont is a fourth and fledgling network is saying, please give out a small number of very high-powered station licenses. And like there be in the northeast, you might be able to give out seven in the northeast, and they would go all the way from Maine to New York and have a big footprint. The alternative was to go local, a policy of localism, where you power down the stations, and you have Boston, and you've got Providence Rhode Island, and you've got Albany New York, and you've got New York City. But hang on a second, if you do it that way, if you go to localism, you can't have the high power, and in fact you have to leave a lot of vacant channels, because Channel 4 in Boston is going to interfere with Channel 4 in Providence. So you've got to leave a whole bunch of channels blank in Boston, a whole bunch of channels blank in Providence. Guess what? Out of 12 VHF signals now, you're way down. In fact, you might go down to three, national viable networks with enough coverage to compete with one another. Remember, if you have a national market, and you can only be in 30 percent of the market, the ones that have 100 percent coverage, they're going to be able to obviously monetize a lot more value out of what they broadcast, and they'll have higher quality programming, and now it's not just you've got, you know, a third of the market, and they have 100 percent possible, you've got a third of the market, and you can't afford to do the programming to compete, to even maintain that, and you spiral down. And so that's what happened in this, I don't know if I've explained it properly. We have, you know, a chapter in the book that tries to do justice for this. It's a very technical rule, but it's easy to understand, and it comes out where the upstart competitors who don't have the market share of CBS or NBC, they're saying, look, have coverage for four, five, six national networks. You can easily do it, and the government says no. We're going to do localism. Now, I've always joked that the optimal, you know, program here is 425 local pro, you know, because you want 435 congressional districts, like the optimal tank. I got to go back to civics. Yeah, so yeah, the optimal, yeah, a tank that's, yeah, a weapon system that may or may not work, but is manufactured in 435 congressional districts. That's the optimal, you know, offensive weapon. But exactly so, you want congressional control here. It figures prominently in the maps that are used by the regulators. You talk about politicizing a market. Well, the end of the day, you get the vast wasteland. You eliminate Dumont. Wait, but we don't have to run the experiment. We did the experiment. And so that is very anti-competitive. Now, the government sees this, and they say, don't worry, we've already allocated all these channels in UHF. UHF had a big handicap, though. They had lower power assignments. They didn't go as far. They were higher frequencies, and most TVs, of course, in the early days, couldn't even get UHF reception. There was the All-Channel Receiver Act of 1962 that it actually mandates that by 64, all the TVs sold in America can get those channels. But that didn't fix the problem, because the UHF, the signals didn't go as far. But the government's answer, why is there only three? Why is it a vast wasteland? Oh, we have all these UHFs for all these guys. Well, it didn't go anywhere. Then Cable comes along. And Cable is just a guy who first goes and picks up a bunch of the stations over the air and then runs a cable down to hook up people who can't get them. Yeah, there's a guy in Mahoney City, Pennsylvania, does this in 1948. He's kind of famous in the industry, and he's selling TV sets. And to sell TV sets, he actually has to take customers up to the top of a mountain. He worked, this guy worked part-time for the electric company, so he actually got an electrical hook-up that was up the mountain, and he got Philadelphia stations. And then, of course, he figured out I can't take everybody up there and sell them a TV one at a time by taking them for a drive. So he wires down an antenna. And so it's a community antenna television line. And he has the antenna up on the hill. He brings the line down, and then people come in the shop and they say, that's a fantastic television. And I'm going to buy that. And, you know, he says to him, you know, when you take it home, don't, if you're not getting reception like this, you know, don't, don't call and tell me, you know, you don't like your TV. And they say, well, how can I get reception like this? You know, he figures out I'm going to charge everybody five dollars a month, and I'll extend this. So, what happens is, the, through the 1940s and 50s then, the TV broadcasters have no problem with cable TV, because it's places like Mahoney City, Pennsylvania, that are 50 miles or so from Pennsylvania, Philadelphia, and they're mountains in between, and they're extending the TV signals from Philadelphia, giving a larger market to people, you know, to, to, to see the advertising and watch, watch broadcast TV. Then what happens in the early 60s is that some cable operators have the idea to go into places that get over the air television, like San Diego, California, Cox Cable, and they microwave L.A. signal south, L.A. TV. And they say to people in San Diego, how would you like to watch the L.A. Dodgers and popular programming that's on L.A. TV that you can't get in San Diego, and it's competing with San Diego television. And they start selling cable TV competitively with broadcasting. What happens in the 60s is that the FCC actually looks twice at regulating cable. And both times they say no, and in fact in the late, about 59, they write a report that says, we don't even have jurisdiction, and why would you want to stop this? It's just, it's totally benign. It's, it's, it's just extending, you know, it's community antenna television. What's, it's not even a federal issue. In 1962, just after the vast wasteland speech, the Newton-Minow FCC, with Minow voting for suppression of cable, reverses FCC policy and says to protect over-the-air broadcasting, and specifically the fledgling UHF stations, the ones that nobody's getting. We're going to block cable TV. And for 15 years they block cable TV. Now finally in the mid-70s, under Ford and Carter actually, this turns out, you know, in the deregulation wave of the 70s. Anyway, finally when you deregulate cable, late 70s, early 80s, cable builds out America. Okay, America gets wired. When do we get the fourth network? I said, Dumont died in 1955 because the FCC suppressed it through its licensing. We don't have a fourth network until 1986, Fox. And why does Fox come in the market 31 years later? UHF was, I mean, I remember getting Fox on UHF channels. UHF, remember the argument of the FCC in the 60s? We have to suppress cable because UHF can't stand the competition. They didn't want to say VHF because the VHF was powerful, CBS, NBC, ABC. That was, those are the big boys. They can, but it's the fledgling, the little UHF, the educational channels on UHF, educational, the name for PBS now. In fact, UHF was nothing until cable could put them on and transmit next to VHF signals. Then the handicap for UHF disappears. People start watching UHF. That's why Fox comes in the market because now with UHF channels on cable, you can get a fourth national network and then there's Telemundo and there's CW and well there's all these broad, we actually have several, you know, seven or eight broadcast networks today because a cable and then of course hundreds, literally about a thousand, over the over the air cable TV networks and then of course unlimited essentially with with over the top internet. This is this whole crazy story of the FCC. We gotta ask what about net neutrality? Now that we see that the FCC is so not very good at determining these rules of the row. We have this new medium that's coming out. I mean the internet is exactly new but an emerging one with new things and everyone's wanting net neutrality and reading your book, I mean I was against net neutrality before but reading your book, I was like, man I do not want the FCC to touch. I mean if Ajit Pai is there but like if it's not him, they could do a lot of damage to the internet if this kind of net neutrality stuff goes forward. Well absolutely and it would be the same story. It kind of seems like it could be the same story. Yeah well it could be. You know in the book I don't specifically talk a lot about net neutrality but there is a regulatory overhead that hangs out there for wireless even in an age again where wireless is the entrant. Wireless is coming in to compete particularly with 5G. They're competing against cable and telephone company fixed line connections now because they're getting faster and faster. You know 20% of the households even we sit here now before 5G. This is the 4G world. 20% of households are quote smartphone only and of course the younger generation getting a lot of video on the handset. You know their eyes are better. They can see this stuff and they're never going to have a landline at least as we can see now. Who knows? I'm not going to make a call for 20 years. That's what the FCC tries to do but the point is that the last thing you world is you want to put this public interest system and with these other ingredients of price control, entry controls, service and quality regulation under Title II literally the 1934 communications act which we had to peel away. I mean the net neutrality story is strong on its own in terms of deregulation works. In fact there you know the amazing thing about the idea today that to protect openness you need regulation is that we had Title II that had to be paired back to get to legalize AOL as an ISP even in the dial-up age to get broadband. We had to allow cable operators and then telephone operators were deregulated later to come in and provide high speed internet and voice over internet was blocked by common carrier rules. They had to be eliminated from the requirements of being a telephone carrier. So there's been a history of deregulation for information services and that has been enormously successful. The market itself has developed a largely open platform but not without vertical integration not without pricing not without business deals not without things like zero rating and binge on that actually give the customers more in terms of access to services that aren't completely priced like common carriers might and people get mixed up about this they think for example the FedEx the overnight delivery business is is common carrier regulated it's not a lot of these markets just evolve in an open and very competitive way on their own what the government ought to do is make it more competitive allow more spectrum in the market allow more players and continue this liberalization that we've seen so successful over the last 30 years. 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