Government Made Markets

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Commentary by Steve Effros

The broadcasters are at it again. They want the government to create another market for them. This time its a demand that there be regulations or legislation that requires that radio receiving chips be included and turned on in all mobile devices. In other words, all cell phones should be radios as well.

Now this idea of having the cell phone work as a radio is neither crazy nor necessarily bad. It's absolutely true that as an emergency communications device radio is probably the most ubiquitous and efficient. As one of the new promotional campaigns about all this notes, “When the weather's bad, the power's out, cell circuits are busy, and the Internet is down, radio can still connect you with critical information.” True, or at least far more accurate than the similar campaign that has been waged on behalf of television and the alleged continued validity of the “must carry” rules.

At least with radios you can carry them with you, running for shelter, for instance, while hearing which way the tornado is heading, or which road is open while trying to escape the ravages of a hurricane along the coast. The batteries in them last, and they fit in your pocket. Those are all good arguments for incorporating a radio chip into a cell phone, since the little, efficient device with a long-lasting battery is already in a majority of our pockets. It's also true that sometimes the “streaming” version of those FM radio stations may go down if the rest of the infrastructure that technology depends on is compromised. Of course the same is true if the FM transmitter loses power and its backup generator fails, or if the tower goes down, but that's much less likely. So let's give them a nod, that as a last-ditch emergency communications device, FM radio makes some sense.

Of course that's not the whole–or maybe even the primary–reason the radio guys are pushing for mandated chips. You see, on their Internet “streaming” feeds they have to pay copyright performance royalties. On the FM radio distribution of that same content they don't. Hence, the FM radio folks (AM doesn't really work in this case, since the telephones aren't big enough for a decent AM antenna to be built in) have a very good business reason for trying to get everyone to listen to the broadcast stream rather than the broadband stream. The problem is they once again are trying to get the government to create the market for them.

I don't think they need to. They have a decent case for why I would want one of these things. It also reduces the bandwidth demand on broadband, and the bandwidth use, which will in turn probably lead to lower costs for the consumer, given that usage based pricing on cell phone data is already the norm. The message is simple: save money, reduce bandwidth use, and rely, when you get a decent signal, on the broadcast feed rather than the broadband feed of local radio stations. But should the government mandate that equipment be included (and, of course, be paid for by every consumer) in every cell phone? Heck no! The broadcasters, just like the rest of us, can make their own case in the marketplace. We don't need any more government made markets. Our experience with all the mandated carriage rules, access rules and, of course, the CableCARD should have proved by now that the government is really bad at this sort of thing.

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