April 2000
Cable, Internet Access and the Commonwealth: Evaluating The Ballot Initiative's Impact on Government and Consumers
By Stuart N. Brotman

IV. CONCLUSION

Last year, the Center for the Study of American Business at Washington University in St. Louis invited Richard C. Notebaert, Chairman and Chief Executive of the Ameritech Corporation to share his views about regulating the communications industry. Ameritech, one of the original Baby Bells, is now part of SBC Communications, Inc., one of the largest telephone companies in the world.

His essay, "The Law of Unintended Consequences," reflects upon "actions taken in Washington and our state capitals [that] have unintended consequences for the communications industry."⁵⁰

"Let's flash back about five years to a time when companies like mine were eager to get into cable TV. . . The FCC set out to divine the outcomes of this market convergence. To do so, they came up with a concept called video dial tone, the gist of which was that companies wanting to offer cable would invest hundreds of millions of dollars in alternate broadband systems. Once such systems were in place, their builders would be required to sell space on them to other companies. They would have very little say about what these companies put over the systems, and they would have absolutely no ability to determine pricing."⁵¹

"During several months of discussion, companies like Ameritech pleaded with the FCC to understand that we could not take on the risk of such an untried investment without the possibility of some reward. But the FCC held fast to its position. As a result, the companies that had planned to come in, build advanced infrastructure and give the public the choice they wanted in cable TV providers said, 'This is crazy. Count us out.' Clearly, such investment would have created jobs. It would have put billions of dollars into the economy. . . . In its effort to manipulate the marketplace and steer the development of competition in cable television, the FCC created the unintended consequence of shutting down the whole initiative."⁵²

Today, the Massachusetts ballot initiative has striking parallels with this example, yet proponents have failed to articulate any connection between the two. The basic point is that government intervention to mandate that the cable television industry provide wholesale Internet network capacity at required rates is bound to follow the law of unintended consequences.

Those that will feel the impact of these unintended consequences most are Massachusetts consumers. As this White Paper has suggested, the debate to date about the ballot initiative has downplayed and, in some cases ignored, the real risks that could be generated by approving a plan for "open access." If proponents continue to rely primarily on theories rather than on real-world experience, and if they fail to address the full range of concerns that the ballot initiative raises, we will be faced with the paradox of closed minds advocating openness, provided it doesn't extend too close to home.

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