by William F. Jasper
by William F. Jasper
The White House folks who want to bring you socialized medicine under
the rubric of "managed competition in health care" are pushing hard
to socialize cyberspace under the guise of "managing the transition"
to the new "information age." In his campaign manifesto, Putting People
First, Bill Clinton called for: "A national information network to link
every home, business, lab, classroom and library by the year 2015. To
expand access to information, we will put public records, databases,
libraries and educational materials on line for public use."
Vice President Al Gore has been given the role of pitch man for this
effort and has taken to it with the same gusto that Hillary has shown
for promoting her brand of fascist medicine. Assisting Gore in this
undertaking is Commerce Secretary Ron Brown, chairman of the Information
Infrastructure Task Force, and Laura D'Andrea Tyson, chairman of Mr.
Clinton's Council of Economic Advisers. That is certainly a trio to
inspire confidence in a national effort to harness and promote dynamic
new technologies: a vice president who authored one of the most
embarrassing, technophobic, Luddite diatribes ever written (Earth in
the Balance); a Commerce Secretary who has hopped from one corruption
scandal to another involving charges of influence peddling and bribery;
and a socialist economist from the People's Republic of Berkeley.
HYPEMEISTER IN ACTION
Al Gore was the logical choice to lead the fedgov charge into the
electronic frontier. While still a senator, he authored the High
Performance Computing and Communications Act, a five-year, $3 billion
boondoggle signed into law in 1991, ostensibly for the purpose of
advancing our nation's high-tech research and development. He has been
nearly as passionate about the need for federal intervention into, and
management of, the exploding technological revolution as he has been
for UN regulation of the global environment.
In a speech at the National Press Club in Washington, DC on December 22,
1993, Gore stated: "Today more than ever, businesses run on information.
A fast, flexible information network is as essential to manufacturing as
steel and plastic. If we do not move decisively to ensure that America
has the information infrastructure we need, every business and consumer
in America will suffer."
"To understand what new systems we must create though, we must first
understand how the information marketplace of the future will operate."
And the "marketplace," you can be sure, always takes on interesting new
meaning when discussed by anyone from Clinton, Gore & Co. The Vice
President continued: "Some highways will be made of fiber optics, others
of coaxial cable, others will be wireless. But this is the key point:
They must and will be two-way highways so that each person will be able
to send information in video form as well as just words, as well as
No, here is the key point: For all it's disingenuous bows to the "market"
and "private sector initiative," the Clinton Administration is determined
to dictate the development of the exciting new frontier of interactive,
multimedia communications. It doesn't trust consumers and producers (and
state and local governments) to work out solutions to the challenges
presented by the new technologies. It cannot countenance the idea of this
huge and lucrative new arena of human activity being outside of its
control. Why must the new highway be two-way, i.e. interactive? Is there
any proof that consumers even want such services? If so, at what cost?
Private companies are already racing feverishly and spending billions of
dollars to develop a host of new technologies that promise to deliver a
vast assortment of services -- including interactive capabilities -- to
individuals, businesses, schools, hospitals, and other institutions.
But Mr. Gore is undaunted by reality in this crusade. "This Administration
intends to create an environment that stimulates a private system of
free-flowing information conduits," he says. "It will involve a variety
of affordable and innovative appliances and products, giving individuals
and public institutions the best possible opportunity to be both
information customers and providers."
"But how do we get from there to here?" asks Mr. Technoveep. "That is
the key question facing government." Indeed it is. "It is during the
transition period that the most complexity exists and that government
involvement is most important," says Gore. And then he gives the
Administration's bottom line: "We want to manage the transition."
Of course. The Clintonistas are big on "managing" and on government-
business "partnerships." They realize full well that in most such
"partnerships" there is a built-in tendency for the "transition" to
become permanent and for government control to increase rather than
decrease. National industrial planning is another name for it. Corporate-
state fascism (government control without outright government ownership)
There are plenty of statists in Congress who support this Clinton-Gore
"vision." According to Senator John D. Rockefeller IV (D-WV), government
has "a unique, essential role in making sure that the private sector is
involved in developing new technologies, turning them into commercial
products, exporting and selling those products, and putting people to work
in jobs that pay good wages." He made that statement earlier this year in
announcing his support for the Clinton-favored National Competitiveness
Act. "This legislation will help our future Thomas Edisons," he asserted.
Rather, it will help our technological dinosaurs who can't convince private
investors of the worth of their products and services, but who have
sufficient political clout to force taxpayers to fund their projects.
FREE MARKET BATTLE
Government is ill-equipped to make any worthwhile market decisions, let
alone those affecting cutting-edge technologies with potential global
markets. Titans of the computer industry such as IBM and Apple have faced
several years of tough times with staggering financial losses and loss of
market share to more aggressive, nimble, and market-savvy upstarts. Armies
of electronic engineers, computer wizards, and financial geniuses are
pulling out their hair over decisions on which technologies to invest in.
Some of their decisions will be wrong and many entrants into the
"information superhighway" race will be weeded out by consumers who will
reject their products and services for one reason or another. That is the
way of the marketplace.
The Clinton-Gore-Rockefeller way, by contrast, would have government
bureaucrats, not consumers, pick the winners and losers. This is a sure
prescription for havoc, bureaucratic inertia, and total frustration of
the potential benefits offered by new technologies. An excellent example
of this is the federal government's subsidies to manufacturers of flat-
panel display screens for computers, one of the critical areas now
dominated by the Japanese. The federal government continues to pour
hundreds of millions of dollars into producers of flat-panels using the
nearly 30-year-old liquid crystal display, or LCD, technology, when there
are other American companies that have developed entirely new technologies
far superior to -- and less costly than -- the Japanese flat-panel screens.
But besides intervening to make sure that industry provides consumers with
the products they want and need, says Mr. Gore, it is fedgov's
responsibility to guarantee that all people have equal access. The sacred
cow of equality goes under the title of "universal service" in
telecommunications jargon. In building the "national information
infrastructure," Gore explains, we want to avoid creating "a society of
information haves and have-nots." And he correctly notes that "the most
important step we can take to ensure universal service is to adopt policies
that result in lower prices for everyone." "But," he goes on to say, "we
will still need a regulatory safety net to make sure that virtually
everyone will be able to benefit." Which is a little like saying that
unless the federal government controls and manages food production and
distribution we will end up as a society of food "haves" dining on caviar
and "have-nots" surviving on dog food.
Dr. George A. Keyworth II of the Hudson Institute tells those fretting
about the information "have-nots" to just "look at the PC [personal
computer] revolution." "The PC revolution happened at an absolutely
explosive rate," he reminds us, "taking place in approximately six years.
It went from around ten percent market penetration to perhaps 50 percent
practically overnight, and it penetrated down deeply into American
society." And it continues to penetrate deeper, as technological advances
and market forces drive down prices of computers, software, and on-line
The same can be said for cellular phone technology. When AT&T launched
its venture into the infant cellular phone universe it hired a consulting
firm, McKinsey & Co., to research the potential cellular market. The
consultants predicted that by the year 2000 there would be 900,000
cellular phone users. Another research firm, Herschel Shosteck Associates,
predicted 1.5 million by the end of the century. They slightly misjudged
the market; by the end of 1993 there were already 13 million cellular
customers, and predictions now are that by the year 2000 there will be
60 million mobile telephone users, not 900,000.
Technology and market forces are throwing just as many uncertainties
into the interactive, multi-media arena. Fiber optics are giving us
virtually unlimited communications capabilities for voice, data, and
video transmissions. The drawback with fiber is cost; laying fiber-optic
cable to every community is labor- and capital-intensive. Which is one
big reason wireless technologies are so hot. Another reason is portability.
Huge advances in microchips and software have freed phones, faxes, and
computers from wires, allowing telecommunications technology to move
from conventional analog transmissions to digital, which converts speech
and data to a stream of ones and zeros understood by computers. Digital
transmissions are less susceptible than sound waves to static interference
and can be compressed or transmitted in bursts to make greater use of the
broadcast spectrum. New computer software programs have made new
transmission technologies such as cellular digital packet data (CDPD)
feasible. Existing cellular systems work at only 60 percent efficiency,
say CDPD developers, leaving a large amount of unused "dead" time. CDPD
breaks voice and data transmissions into bits that can be squeezed into
the "dead" spaces between sentences, words, or even syllables in the
electronic stream -- and then reassembles the transmission at its
New cellular telephone technology is also freeing up the previously jammed
frequency spectrum. The U.S. is now covered with thousands of cells, many
of them miles in diameter, using the same spectrum frequencies. By making
the cells smaller -- say, thousands or even hundreds of feet across -- and
covering the country with hundreds of thousands of these cells, it is
possible to dramatically increase transmission capacity through the re-use
of currently crowded frequencies and the use of very high frequencies that
presently have few users. In fact, with emerging technologies making
frequency spectrum a much less precious and crowded commodity, and making
signals much less vulnerable to interference, the federal regulation of
spectrum is becoming harder and harder to justify.
Unfortunately, the regulators and the politicians are unwilling to yield
any of their power. Instead, they are throwing road blocks onto the
information highway. Industry giants and new entrepreneurs alike are being
stymied in their efforts to bring consumers the technologies the Clinton
Administration says it is all for. In February, a $26 billion buyout of
cable television giant Tele-Communications Inc. (TCI) by Bell Atlantic
Corp. fizzled largely because of the Federal Communications Commission's
(FCC) 17 percent rate roll-back of cable television rates, which caused
TCI's stock to fall. In April, Southwestern Bell Corp. and Cox Enterprises
called off a proposed $4.6 billion partnership, citing the FCC's new cable
television rate cutbacks as the culprit responsible for souring the deal.
At the same time, AT&T's planned $12.6 billion purchase of McCaw Cellular
Communications was nixed by Federal Judge Harold Greene, who presided over
the breakup of AT&T in 1982 and still holds tight control over nearly
every move AT&T and the "Baby Bells" make toward interactive communications.
The Wall Street Journal reported on April 8th that the FCC's bureaucratic
morass has created a "logjam." "The agency has approved just five trials
for interactive video services. Another 17 requests are pending, and some
of them have languished at the agency for more than a year," said the
Journal. According to Journal reporters John J. Keller and Leslie Cauley,
"the FCC uses an approval process that dates back to the early 20th century
and originally applied to railroad requests to extend their tracks. Today
it is a fractious affair. One Bell Atlantic filing alone has had more than
50 pleadings, as consumer advocates, potential competitors, incumbent cable
operators, and municipal officials weigh in with their conflicting views."
So much for Mr. Gore's cutting-edge government.
Even when the FCC tries to be helpful to industry, it gets it wrong. Earlier
this spring, the agency sent cable television operators computer disks with
the new mandated rate reductions. "But the agency used the Excel spreadsheet
program instead of Lotus, which is used by almost every accounting department
in the industry," the Journal reported. "The FCC is now working on a Lotus
version." Nice, but a little late to do much good.
GET OUT OF THE WAY!
The best thing for the federal government to do is simply to get out of the
way and let the consumers, inventors, innovators, and producers -- rather
than bureaucrats and politicians -- build the information autobahn. There is
no shortage of interested private parties willing to undertake the task.
Long-distance phone giant MCI has unveiled plans to invest $2 billion to
build "the nation's first transcontinental information superhighway." In
Orlando, Florida Time Warner says it will have its Full Service Network
(FSN) up and running to 4,000 homes by year's end. Customers will be able
to call up movies on demand, carry out electronic banking and shopping,
and have access to government agencies. In Omaha, U.S. West is test-
marketing a similar service. Cable operators are seeking permission to
compete with local phone companies in offering access to computer data
bases and services. Hundreds of companies are forming alliances and
consortiums to pool resources for the effort.
END OF ARTICLE
THE NEW AMERICAN -- July 25, 1994
Copyright 1994 -- American Opinion Publishing, Incorporated.
P.O. Box 8040, Appleton, WI 54913