How John McCain’s techno-monopolism
will hurt the economy
John McCain is an AT&T guy; Barack Obama is a Google guy. And that’s one of the most important policy differences between the two.
Think of the Internet as working at different layers. There are all the pipes that go into your home, and then there’s all the stuff on your screen—from e-mail to eMule. The telecom companies like AT&T control the pipes; the software companies, like Google, create the stuff.
In an ideal world, both these layers would be sites of great innovation and creativity. But in the United States, that isn’t so. The software industry may seem like a team of Gandalfs, constantly producing magic. But the average telecom company resembles Jabba the Hut: it moves slowly and slobbers a lot.
The United States created the Internet, but it’s the rest of the world that can really use it. People in Japan are twice as likely as Americans to have broadband connections, and their pipes are ten times as fast. Compared to France, U.S. Internet access is twice as expensive and one-fourth as quick. Since 2000, the United States has gone from fifth in the world to twenty-second in broadband penetration. We have become a nation of buffering YouTube videos.
What went wrong? It’s not that telecommunications companies are inherently lazy. Such companies innovate, after all, in East Asia. And it’s not just that the United States is a big rural country. That explains some of our lag, but not all. Canada and Australia are thumping us too.
The real reason things went wrong is that we haven’t regulated our telecom markets properly. And that’s where John McCain comes in.
The problem is primarily the lack of competition among Internet providers. In most places, you have, at best, two choices—the local cable company or the local phone company. And these behemoths know that they don’t have to worry about new competitors. With the government’s help, they spent decades digging up roads and building lines...