Why Ajit Pai is wrong about net neutrality

… [H]istory tells us that if [FCC chairman Ajit] Pai really wants to create a climate of competition and innovation, he would have upheld net neutrality. Time and again in FCC history, regulation has created such a climate.

In fact, promoting consumption and access at the expense of corporate domination is the very reason for the FCC’s existence. By fostering opportunities for new entrants, rather than promoting the interests of established corporations, FCC activism and intervention have historically benefited the media industries it regulates, and the public.

FCC chairmen do not loom large in popular memory of the media industry. Far more Americans can identify Ted Turner, Steve Jobs or Bill Paley than James Lawrence Fly, for instance. But the decisions made by these chairmen matter. Consider, for example, the role that Fly — FCC chairman in the early 1940s — played in taming corporate power in broadcasting, ultimately giving Americans the ABC network through FCC regulations.

NBC originally owned and operated two separate radio networks, named Red and Blue for colored pencil lines drawn on engineering maps. CBS and the Mutual Broadcasting System (MBS) successfully entered national broadcasting by the mid-1930s, prompting NBC executives to leverage the Blue network to prevent further competition. They inserted restrictive clauses in NBC advertising contracts limiting where and how advertisers could purchase broadcast time. They even undercut their own stated prices to monopolize new business.

Advertisers had no choice but to play along — NBC Red dominated the ratings and aired the nation’s top radio stars. Such tactics, however, frustrated everyone in the industry and limited programming choices for the public. So the FCC intervened with a ruling that denied a second station license to any network already operating one station in any American city.

NBC executives were furious. They attacked Fly by planting scurrilous articles in friendly media outlets. They sued the FCC, but ultimately lost in a landmark 1943 Supreme Court decision. Without further recourse, NBC completed the divestment of the Blue Network by selling the newly-renamed American Broadcasting Company to Edward John Noble, the Lifesavers candy magnate.

Soon competition in network broadcasting intensified and new genres of programming emerged as ABC sought to establish itself as a competitor to NBC.