Free enterprise for digital divide
I'VE SEEN a lot of sights over the years on our family ranch in Wyoming, but I never expect to see a cable company crew stringing wire across miles of grazing land to provide us with cable TV and the option for broadband digital services.
It's not going to happen. The cost would be prohibitive, even if the cable companies were interested.
And having represented a rural state in the U.S. Senate for 18 years, I've heard more than my share of empty promises. So I'm somewhat skeptical when I hear the regional Bell companies promise that they will provide rural America with broadband services if Congress will give them just one more huge handout and shield them from the horror of fair competition.
These are the same companies that have been selling off their rural exchanges as fast as they can find buyers.
Yet I'm confident that rural Americans won't be left on the wrong side of the digital divide. The reason for my confidence can be summarized in two words: satellite communications. The satellite industry has a strong track record of serving rural America, not with promises but with programming. Satellite providers deliver service in rural areas that other companies literally won't go near.
Now the two leading satellite providers, EchoStar and DirecTV, want to merge into one company with the combined capacity to offer broadband digital services via satellite along with TV programming. This merger is a free-market solution to the digital divide problem. It would make affordable broadband digital services as easily available to rural areas as satellite TV programming is now. It's in the interest of all rural states to see that the Federal Communications Commission, the U.S. Department of Justice or any state-level attorneys general don't block this merger or saddle it with unreasonable conditions.
Besides the fundamental benefit of delivering broadband service to rural America, the merger would be a competitive shot in the arm for the whole pay-TV market.
That market was a cozy monopoly held by the cable companies even 10 years ago. Satellite TV changed that. Today EchoStar and DirecTV have a combined market share of 17 percent, compared to 80 percent for cable companies.
The competition from satellite put the heat on cable providers to roll out new services for customers, including digital broadband services. That's the way a competitive free market is supposed to work.
The proposed EchoStar/DirecTV merger is a winner for everyone. Their combined broadcast spectrum would give the new company the technical ability to carry many more local channels. And, of course, that spectrum would let them offer nationwide satellite delivery of high-speed Internet access and other broadband digital services.
Satellite delivery of those services by the merged EchoStar and DirecTV would be a competitive sweetener for areas already served by both cable and satellite TV companies. For many rural areas, however, this merger offers the only affordable ticket to the digital future.
All government has to do is stay out of the way and let this merger happen.
Malcolm Wallop is a former U.S. Senator from Wyoming and chairman of Frontiers of Freedom, an advocacy group for free markets and opposed to unnecessary government regulation.
A farm bill for farmers
IT SEEMS that every farmer in the Mid-South is worried about the failure of the current farm program. But the consensus among farmers seems to be that all we need is more government money. I submit that the real problem is overproduction brought on by the planting excesses of freedom to farm. The new farm bill must incorporate some mechanism for limiting the acreage of those crops where supply has gotten completely out of kilter with demand.
We learned in Ag. Econ. 103 that our staple farm commodities such as cotton, corn, soybeans, and rice have a relatively inelastic demand. Production much in excess of what the market needs will result in sharply lower prices. This basic economic concept has been demonstrated time and again with the advent of freedom to farm. If we all raised crops with highly elastic demand such as bananas or grapes, freedom to farm would allow us to overproduce and still maintain some degree of profitability.
Both the House and Senate versions of the new farm bill are good. We really need the opportunity to update our crop bases and yields in order to level the playing field for all farmers. We also need as much flexibility as can be preserved. But, any bill that does not provide some mechanism for triggering an acreage reduction when needed, dooms us to producing ourselves and this country into bankruptcy. Federal crop insurance programs that bring marginal land into production just to collect the insurance should be eliminated. It is estimated that this program alone, in 2001, added a million bales to an already glutted cotton market.
I understand that supply management is a bad word in Washington. Lobbyists for the fertilizer, chemical, and equipment manufacturers would be opposed to any reduction in crop acreage. But they certainly know how to control the supply of their products, and we pay for it every time we buy an input item. This is, after all, a farm bill and it should benefit farmers.
I sincerely hope that the Senate will think this thing through and act accordingly. We need to be collecting more money at the market place and less from the government. We should all give our legislators encouragement to move in that direction.