GAO Report: Believing in Competition Doesn’t Make It Happen

Sometimes I think that the D.C. Circuit and the Republicans running the various Commerce Committees are the Arch Priests of Kiplings Gods of the Market, and it has brow-beaten the poor FCC through repeated reversals accompanied by tongue lashings into embracing this nonsense. The chief tenant of the Gods of the Market Place is that by deregulating the industry, competition emerges and consumers enjoy all the happiness that comes from a competitive environment. If this fails to happen as expected, adherents of the Gods of the Market practice a discipline called “Denial of Reality.” Practitioners of Denial of Reality believe that if you sufficiently discredit people who tell you about actual reality, and keep repeating that the reality you want actually exists, then Actual Reality will eventually by browbeaten into conforming to the reality promised by the Gods of the Market Place. And the FCC, like a good little penitent, keeps trying to produce reports that give the D.C. Circuit and the Republicans in Congress the world they want to see rather than actual reality.

Sadly, as GAO studies keep demonstrating, wishing for competition doesn’t make it so. This latest GAO Report on the lack of competition for business customers in major urban areas (and nicely explained in this piece here) is but the latest in a series of real world reports demonstrating that you can only ignore reality for so long before it bites you in the tender places. Sadly, however, it chomps down hard on the just and the unjust alike.

My analysis below . . .

AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.

–Rudyard Kipling, The Gods of the Copybook Headings

Under the stern tutelage of the D.C. Circuit, which repeatedly reversed any efforts by the FCC to actually enforce the pro-competitive aspects of the 1996 Telecommunications Act, the FCC has done its best in recent years to worship the Gods of the Market Place, cast out the Gods of the Copybook Heading, and remain faithful to Denial of Reality. The FCC has approved merger after merger with limited conditions. It has deregulated as fast as it’s meeting schedule will allow. It has granted forebearance petition after forebearance petition for the telcos, all while loudly proclaiming the Holy Writ taught to it by the D.C. Circuit: “Competition Exists! We Are Arbitrary and Capricious That Do Not See The Blessed Competion! Deregulation Makes Markets Competitive! Forgive Us, Oh Activist Federalist Judges, For Not Deregulating Further and Faster! All praise the Gods of the Market Place!” And the D.C. Cir. smiles benignly and starts affirming the FCC instead of reversing it.

Most perniciously, the FCC keeps jiggering its reports to make sure its happy reality picture stays happy. Congress over the years has required the FCC to monitor various industry sectors to determine if they have become or remain competitive. The FCc is always at pains to arrange things to get the right result.

So, as the FCC Denial of Reality picture keeps drifting further from Actual Reality, folks in Congress have needed to turn to other places to get reliable information on Actual Reality. In doing so, it frequently relies on the Government and Accountability Office (GAO), an independent research arm of Congress.

“With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.”

Alas, GAO, while charged with providing as accurate a picture of Actual Reality as possible, has spent 12 years under the thumb of a Republican Congress with powerful members who are also fervent believes in the Gods of the Market Place and in the power of Denial of Reality. These believers brook no nattering nabobs of negativity from Actual Reality, and have no qualms about punishing those unfortunate enough to bring contradictory Actual Realities to their attention. Those that worship the Gods of the Market Place and believe in the power of Denial of Reality hold that declaring reality makes it true. They therefore take it as a positive and worthy deed to discredit and abuse proponents of Actual Reality until Actual Reality conforms itself to the land promised by the Gods of the Market Place.

So GAO has gotten very good at worshiping the Gods of the Copybook Headings while pretending to mouth the liturgy of the Gods of the Market Place. This hides the Actual Reality from the true believers who insist that deregulation has produced squindoodles of competition and thus has brought lower prices and better services to the public, while providing the data and evidence for them what really want to know what Actual Reality looks like.

Thus, when asked to study the actual state of competition in the “special access” market (what businesses pay for telecom services), the GAO went out and got a good picture of Actual Reality. This included a large number of absolute “no-nos” to the worshipers of the Gods of the Market Place. So the GAO called its Report “FCC Needs to Improve Its Ability to Monitor and Determine the Extent of Competition in Dedicated Access Services.” and pretended that this is just about improving the efficiency of FCC data reporting. When the FCC objected that the Actual Reality portrayed in the report would seem to suggest that the FCC should reinstitute (GASP) price regulation, the GAO hastened to reassure everyone reading that no, no! Heaven forbid! We have no wish to offend the Gods of the Market Place with such heresy as price control! We just think the FCC could do a better job of collecting data. Because, if it did, it would notice that:

1) There isn’t nearly as much competition as the FCC says there is, in fact, it appears to range from barely noticeable to negligible to nada;

2) The “colocation method” for determining competition developed by the FCC and blessed by the D.C. Cir. drasticly over reports the presence of competition and is pretty meaningless;

3) Once the FCC totally deregulates prices because it finds sufficient competition, it never checks back to see if the competing firms continue to survive or, if once the FCC has blessed the area and gone away, the ILECS utterly devour the competing firms and leave no trace like Pharoh’s thin cows gobbling up the fat cows;

4) Where the FCC has completely deregulated special access prices, special access prices have gone up;

5) These trends have accelerated since the FCC permitted two ILECs to buy out the two largest competing special access providers, but this is probably just a random coincidence that does not in the least suggest the FCC should scrutinize mergers better.

But we’re not suggesting anything radical as reregulating! We just think the FCC could reflect Actual Reality better so it, Congress, and the D.C. Cir. can doa better job Denying Reality better.

“Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.”

The recent election of a somewhat more progressive Congress may signal that the Gods of the Market are coming to the end of their current run. Certainly the recent letters by Dingell, Markey and Inouye make it clear they will not turn a blind eye to Martin’s efforts to unrecuse McDowell and push through the AT&T/BellSouth merger over the objections of Copps and Adelstien. Nevertheless, we can expect the D.C. Cir. to continue to use its pulpit to prosletyze most vigorously for the Gods of the Market Place no matter how much Denial of Reality it takes, and I doubt that Republicans Like Ted Stevens or even Democrats like Al Wynn, who vote against net neutrality and anti-redlining provisions because deregulation WILL create competition and universal delpoyment (this time for sure!) have lost their religious fervor.

“As it will be in the future, it was at the birth of Man
There are only four things certain since ‘Deregulation’ began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool’s bandaged finger goes wabbling back to the Fire;

And when all regulation is vanquished, and the brave new world begins
Where incumbents have no market power, and consumers are never locked-in,
As surely as Water will wet us, as surely as Fire will bum,
The Gods of the Copybook Headings with terror and slaughter return.”

Stay tuned . . .