FCC Lays Ground for Crony Capitalism

Mytheos Holt
Posted: Nov 18, 2015 12:01 AM
FCC Lays Ground for Crony Capitalism

During the fourth Republican debate, former Hewlett Packard CEO Carly Fiorina correctly noted that “big government has created a big business called politics. And there are lots of people invested in the status quo of that big business called politics.” What Fiorina did not say was that, particularly in the tech sphere, the big business of politics loves to attempt hostile takeovers, often in the guise of trying to stop genuinely predatory behavior. Ironically, the biggest beneficiaries of such takeovers are usually the predators themselves.

No better example of such disingenuous action exists than the current proposed FCC enforcement action against LTE usage of “unlicensed” spectrum.

I can already feel uncomprehending stares through my keyboard, so before I go any further, let me explain what this is in English. Imagine the internet as a highway, with data being the cars that drive on it. People who use WiFi to get their data (IE most everyone who uses wireless internet) use a few lanes in that highway, which we’ll refer to collectively as “unlicensed spectrum.” However, big companies like Verizon, AT&T, and Qualcomm want to use new technology called LTE-U. In English, what this technology does is add more cars (which we’ll call “LTE-U Traffic”) to the wireless lanes, because they believe Qualcomm et al believe they can get data to people faster that way. The problem is that their cars also hog all the available gas stations, which means that only LTE traffic actually gets anywhere, while everyone else is stuck. Basically, Verizon, AT&T, and Qualcomm want to get faster data for their customers at the expense of everyone who uses WiFi.

Of course, they claim they’re doing nothing of the sort, but are only trying to deploy new and innovative technology to help everyone. Witness a recent op-ed coauthored by Rep. Henry Waxman (D-CA) making precisely this argument. However, as any conservative knows, when Henry Waxman starts talking about “innovation,” you should reach for your gun. And indeed, tech-centric blogs have pointed out that while it’s possible for this new technology to not suck all the oxygen out of wireless internet, the fact is it’s also easy for big companies to design it such that it looks benevolent, but actually suffocates their competitors. In other words, this technology permits competition the same way Obamacare’s “public option” would have: by rigging the game in advance.

With me so far? Okay. Here’s where the FCC comes in. They just recently decided to step in and take action allegedly to stop the LTE-U supporters from engaging in vaguely defined “anticompetitive behavior.” Left-leaning groups like the Open Technology Institute (which, to its credit, has said otherwise sensible things about LTE-U) have predictably cheered this as protecting the little guy. However, as anyone who watched the fight over net neutrality knows, left-leaning tech groups have an Inigo Montoya problem when they talk about government protecting the little guy: They keep using the words, when those words mean the opposite of what they think.

The truth of the matter is that the FCC stepping into this fracas is just one more step toward total FCC control of the internet. If that happens, then the biggest beneficiaries won’t be the plucky little WiFi users. They’ll be the people politically connected enough to strongarm government departments into doing their will: people like Verizon, T-Mobile, and Qualcomm. In other words, the FCC might literally be setting the precedent that lets them kill WiFi under the guise of saving it. And we all know government is very good at killing that which it claims to save.

The fact of the matter is that, as the blog Wetmachine points out in an amusing but wonky post, one company in particular benefits from the FCC’s action, and it’s not a WiFi carrier. Rather, it’s LTE-U’s biggest cheerleader, Qualcomm. How can this be? Because the FCC action reinforces the narrative that LTE-U and WiFi can’t coexist at all, which in turn keeps its competitors at each others’ throats.

The truth is that Qualcomm, a company that’s already been showing signs of becoming a patent troll, created this narrative out of whole cloth because it wanted to keep a monopoly on various forms of technology. So of course, they’re pleased as punch at the FFC, because if you want to keep a monopoly and stifle competition, who you gonna call? Big government!

There’s an easier solution, of course, which is just to get rid of the wrinkles in patent law that permit companies like Qualcomm to keep a stranglehold on their monopoly power while distracting their competitors with unnecessary fights and lapping up corporate welfare disguised as necessary intervention. In basic terms, use patent reform to force every company to face the free market without being able to hide behind their investments in the big business of politics.

Even in a subject this wonky, that’s just common sense. But then, when has common sense ever prevailed in Washington?