Public Interest and Telecom Regulations

Paper Summary:

The telecommunications policy community in the U.S. has historically emphasized the importance of operating in the public interest. Although notably difficult to define, public interest is the underlying ideology that justified regulation of the telephone industry in the twentieth century and the distribution of radio licenses in the 1920s. This paper explores the concept of the public interest as it relates to the telephone system and radio. First, it examines the concept of public interest in the context of telecommunications and broadcasting policy. In this section, the paper examines the shift in public interest ideology from concern about equity to concerns with market controls and economic efficiency. In section two, the paper discusses policy implications of the public interest in the telephone industry and radio. Specifically, it explores distributional implications. In my third and final section, the paper examines changing policy implications over time and summarizes the argument.

From the Paper:

"The telecommunications system is characterized by network externalities: the value of the network depends on the number of people that are connected. The more people connected to the system, the more valuable it becomes to each user. When the telecommunications network was being developed in the late nineteenth and early twentieth centuries, reaching an increasing number of users was therefore both a competitive strategy of telecommunications companies and a social and economic goal of policy makers (Mueller, Milton L, 1997). By the 1930s, the promotion of commerce and the expansion of the marketplace were fundamental public interests that justified the regulatory role of the state in telecommunications infrastructure (Horwitz, Robert Britt, 1989). Paramount to the genesis of the Federal Communications Commission (FCC) in 1934 was the ideology of diffusion of telecommunications infrastructure and services throughout the United States."

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