*     Lawrence J. Spiwak is the author of numerous leading articles addressing the complex legal and economic issues affecting regulated industries. Currently, Mr. Spiwak is a Senior Attorney in the Competition Division, Office of General Counsel, Federal Communications Commission. The views expressed herein are exclusively those of the author and do not express the views of the Competition Division, Office of General Counsel, or the Federal Communications Commis­sion. The author would like to thank his colleagues in the Competition Division and his numerous other friends sprinkled throughout the U.S. Government and industry for their help with this article. The author would like to dedicate this article to his newborn daughter, Amanda Allyn, because it is she who will live tomorrow in the world we create today.

[1]       FCC v. RCA Communications, Inc., 346 U.S. 86, 93-95 (1953).

[2]       See Thomas W. Hazlett & George S. Ford, The Fallacy of Regulatory Symmetry: An Economic Analysis of the “Level Playing Field,” in Cable TV Franchising Statutes (1997) (unpublished manuscript) (citing Harold Demsetz, Informa­tion and Efficiency: Another Viewpoint, J.L. & Econ., Apr. 1969, at 1‑22) (notion of “fair, competition‑like outcomes” is ridiculous because regulators will never “choose ‘efficient’ prices, outputs, and quality costlessly and with perfect information”); see also Paul McNulty, Economic Theory and the Meaning of Competition, 82 Q.J. Econ. 639‑56 (1968).

[3]       See James K. Glassman, Consumers First, Wash. Post, Oct. 24, 1997, at A21 (noting that Adam Smith concluded over 200 years ago: “Consumption is the sole end and purpose of all production, and the interests of producers ought to be attended to, only insofar as it may be necessary for promoting that of the consumer.”).

[4]       Again, as I have argued in the past, “economic-style” or “public interest-type” regulation has really become the intellectual equivalent of “kosher-style”—i.e., it tastes really good, but it still violates all of the dietary laws. Lawrence J. Spiwak, Reconcentration of Telecom­munications Markets After the 1996 Act: Implica­tions for Long-Term Market Performance, Antitrust Report, May 1997, at 21 n.12 [hereinafter Market Reconcentra­tion].

[5]       Again, as I have argued in the past, “economic-style” or “public interest-type” regulation has really become the intellectual equivalent of “kosher-style”—i.e., it tastes really good, but it still violates all of the dietary laws. Lawrence J. Spiwak, Reconcentration of Telecom­munications Markets After the 1996 Act: Implica­tions for Long-Term Market Performance, Antitrust Report, May 1997, at 21 n.12 [hereinafter Market Reconcentra­tion].

[6]       For a detailed exegesis of the current restructuring process underway in the electric utility industry, see L. Spiwak, Utility Entry Into Telecommunications: Exactly How Serious Are We?, Phoenix Center for Advanced Law and Economic Policy Studies Press (forthcoming Winter 1998).

[7]   For example, because an electric utility generally has several rate cases pending before FERC at the same time, so long as the utility knows that its regulator has the power and disposition to inflict swift and severe punishment (i.e., adverse rulings costing millions of dollars) in any one of its pending rate cases, the regulated entity has absolutely no incentive to challenge FERC’s generic “restructuring” policies in other rulemaking proceedings. See Frank Easterbrook, The Court and the Economic System, 98 Harv. L. Rev. 4, 39 (1984) (“[A]n agency with the power to deny . . . or to delay the grant of [an] application . . . only if the regulated firm agrees to conditions . . . is a potent way to greatly increase the span of the agency’s control. ” (emphasis supplied)).

[8]   Cf. George Orwell, Animal Farm (1945) (because the animal residents of the farm were promised, and always continued to believe in, a great utopian society—i.e., “four legs good, two legs bad”—everyone refused to accept and recognize the increasing amount of adverse develop­ments occurring around them; the end result, of course, was not a utopian paradise, but was instead nothing more than a farm run by pigs).

[9]       As discussed more fully below, however, this article distinguishes between “economic” regulation (i.e., price, structural, and conduct regulation) and residual “public interest” regulation, which seeks to promote societal policies unrelated to competitive conduct.

[10]     See, e.g., Communications Daily, Aug. 27, 1997, reporting that FCC’s “pro-competitive actions,” such as access charge reform, number portability, and universal service revisions, “could delay competition rather than speed it.” In particular, the article reported that “at least” four FCC goals would “backfire”: (1) lower long distance rates would be offset by increased subscriber line charges; (2) reductions in access charges to long distance companies would be offset by higher costs from “dramatic expansion” of universal service fund to cover such things as school and library wiring; (3) universal service goals would be “undermined by the FCC’s failure to set cost‑recovery mechanisms for high‑cost service areas”; and (4) local phone companies could be unable to maintain network infrastructure properly because of cost drains resulting from “unfunded FCC mandates” to provide local number portability, make rate reductions, and offer interconnection. According to the article, the Commis­sion’s basic assumptions that “competition can be stimulated by regulatory decree” may be incorrect and, as such, “may have the unintended effect of suppressing competition and defeating the intent of the Telecom Act.”

[11]     See, e.g., Paul Farhi, Telephone Market Probes Planned: FCC, Senate Ask Why Competition Is on Hold, Wash. Post, July 16, 1997, at C11. It should also be noted that another popular defense is the argument that consumers would be enjoying the benefits of competition if only the courts would accord regulatory agencies the unfettered discretion they deserve. See, e.g., Testimony of Reed E. Hundt, Chairman, Federal Communications Commission on the 1996 Telecommunica­tions Act: An Anti-Trust Perspective, before the Subcommittee on Antitrust Business Rights and Competition, Committee on the Judiciary, U.S. Senate (Sept. 17, 1997). According to Hundt, the prevalent “legal fog” of litigation that “surrounds every significant FCC decision immediately upon adoption” is significantly slowing “the pace of competition in the telecommunications industry.” Congress, however, can help fix these problems by, inter alia, “re-affirm[ing] the deference courts should give to the FCC's expert judgement, as articulated by the Supreme Court in the Chevron case.” Unfortunately, once again neo-competition proponents tragically miss the point: while it is true that courts must give great deference to an administration agencies’ expertise, this expertise does not, nor should it ever, grant an administrative agency absolute immunity from review. See, e.g., MCI v. AT&T, 512 U.S. 218, 229 (1994) (“an agency's interpretation of a statute is not entitled to deference when it goes beyond the meaning the statute can bear”).

[12]     See Michael J. Mandel et al., A Pack of 800 lbs Gorillas: The Number of Major Corporate Players Is Shrinking. Is that Bad?, Business Week, Feb. 3, 1997; John Greenwald et al., Hung Up on Competition, Time, July 21, 1997, at 50; see also Zaiba Nanji & Kirk Parsons, So Many Choices, Telephony, July 14, 1997.

[13]     See Jerry Hausman, Taxation by Telecommunications Regulation, in Tax Policy and the Economy (forthcoming 1998) (calculating that the efficiency loss to society of policy to raise $2.25 billion per year to fund an Internet subsidy to schools and libraries to be approxi­mately $1.25 per dollar raised, or a total of approximately $2.36 billion per year (in addition to the $2.25 billion per year of tax revenue)); Robert J. Samuelson, Telephone Straddle, Wash. Post, May 14, 1997, at A21 (FCC, at the behest of Congress, “perpetuated a baffling system of . . . subsidies—and created a huge new one to connect every school to the Internet” which will “prop up phone rates [and] prolong regulation.” Moreover, because this program “is mostly a way to subsidize photo ops for politicians who like to be seen with children and computers . . . it’s a lousy idea . . . because computers won’t teach children how to read, write and think.”); Michael Schrage, Just Say No Net in Schools, Hotwired, Feb. 19, 1997 (notion of wiring the schools is “pathetic” because the idea is “just the latest technology that desperate educators, unhappy parents, and pandering politicians have tacked onto in hopes of avoiding the real problems confronting the schools”).

[14]     Actually, this point is a bit disingenuous. Given the huge amount of money at stake, coupled with the corresponding amount of legislative and regulatory capture behind the 1996 Act to get or protect a chunk of this money, it is very obvious that a lot of people did a lot of thinking about what long-term market structure should look like. The only problem with this process, however, is that consumer welfare was clearly at the bottom of everyone’s priority list. Indeed, Scott Cleland, Director of Legg Mason’s “Precursor Group,” observed that the “political reality” behind the 1996 Act was that “the Bells and the local telcos were the driving force behind getting this legislation done” and that the politicians and regulators simply served as “natural accomplices” in spin that legislation was a “fair balance” rather than “admit they chose winners and losers, even though they did . . . . [However,] the cold reality is that the Bells WON and the long distance industry LOST.” (Emphasis in original.) Perhaps Time magazine summed it up the best: “if you were a local phone company with 100% of the market, how helpful would you be in allowing a competitor into the area? Exactly.” John Greenwald et al., supra note 12.

[15]     See Jacobellis v. Ohio, 378 U.S. 184, 197 (1964) (Stewart, J., concurring) (while it is impossible to define “obscenity,” “I know it when I see it. ” (emphasis supplied)). Thus, if government continues to intervene in the market without providing any legal or economic analysis to justify its actions, then the terms “market power,” “dominant,” or “anticompetitive” will essentially boil down to nothing more than the intellectual equivalent of “I don’t like you.” See TV Communications Network, Inc. v. Turner Network Televi­sion, Inc., 964 F.2d 1022, 1026 (10th Cir.), cert. denied, 113 S. Ct. 601 (1992); see also Hawaiian Telephone v. FCC, 498 F.2d 771, 776-77 (D.C. Cir. 1974) (FCC “cannot merely assert the benefits of competition in an abstract, sterile way”).

[16]     See Samuelson, supra note 13 (for Congress in the 1996 Act to order the FCC “[t]o do all this in the name of ‘deregulation’ is odd” because “Congress and the FCC praise deregulation and practice regulation”; moreover, “States, which control local rates, also like regulation”); Congress Should Mandate FERC Oversight of ISOs, Coalition Says, Inside F.E.R.C., Mar. 31, 1997 (reporting that now FERC Chair James Hoecker stated that while competition should be allowed to work without the distortion regulators can sometimes cause, Hoecker argued that “government should not hesitate to intervene where . . . non-market power values are deemed worthy of protection, if it can do so in a competitively neutral way and in defense of the competitive interests of the market”); see also James A. Miller III, Reindustrialization Through the Free Market, 53 Antitrust L.J. 121, 124-25 (1984) (when government takes “an activist,” collaborative approach to work with industry in order to promote “competition,” it is virtually impossible to avoid the inevitable conclusion that the outcome of such policies “could do anything but restrict output, raise prices and retard innovation”; because such an approach ignores “the distinct interests of over 200 million American consumers in lower prices and higher product quality” most consumers should “start counting their silverware”).

[17]     See Samuelson, supra note 13 (Congress and the FCC are “manipulating deregulation to advance pet agendas”).

[18]     Sort of like the process of forcing fruit through a juicing machine—you need to break up each individual juice cell to get the maximum amount of juice.

[19]     See Lawrence J. Spiwak, What Hath Congress Wrought? Reorienting Economic Analysis of Telecommunications Markets After the 1996 Act, Antitrust, Spring 1997, at 32, 36 [hereinafter Reorienting Economic Analysis] (without adequate forethought, the “possibilities for innovative ways to maximize—or, if we are not careful, to harm—consumer welfare seem endless”); Market Recon­centration, supra note 4, at 24 (“[B]ecause of the huge economic and societal implications at stake whenever government starts talking about a fundamental ‘restructuring’ of any industry . . . without effective quality control, the final omelet may be so unappetizing that American consumers may end up with only dry toast and water on the menu.”). Indeed, our “profound national commitment to the principle that debate on public issues should be uninhibited, robust and wide-open” is reflective of the fundamental understanding that “[c]ompetition in ideas and governmental policies is at the core of our electoral process.” See, e.g., Elrod v. Burns, 427 U.S. 347, 357 (1996); Saxbe v. Washington Post Co., 417 U.S. 843, 862-63 (1974) (Powell, J., dissenting) (“[S]urest course for developing sound national policy lies in a free exchange of views on public issues. And public debate must not only be unfettered; it must also be in­formed.”); see also United States v. NTEU, 513 U.S. 454, 469-76 (1995).

[20]     See, e.g., ABC Cos. Inc., 7 F.C.C.2d 245, 249 (1966) (“Antitrust Division is charged with the enforcement of the antitrust laws . . . while the Commission is charged with effectuating the policies of the Communications Act.”); see also Dissenting Statement of FTC Commissioner Mary L. Azcuenaga in Time Warner, Inc., FTC File No. 961-0004 (Aug. 14, 1996) (because FCC already had rules in place prohibiting discriminatory prices and practices, there was “little justification” for the FTC to require Time Warner to “comply with communications law” and, therefore, to the extent that the proposed consent order offered “a standard different from that promulgated by Congress and the FCC, it arguably is inconsistent with the will of Congress”; as such, “[t]here is much to be said for having the FTC confine itself to FTC matters, leaving FCC matters to the FCC ” (emphasis supplied)).

[21]     See Reorienting Economic Analysis, supra note 19, at 32-33. Notwithstanding the above, however, antitrust enforcement agencies often cannot overcome the temptation to become pseudo-regulators. See id. at 33; This trend appears to have increased exponentially over the last several years, as the various antitrust enforcement agencies on several occasions simply have ordered the defendants to obey applicable FCC regulation(s). See Market Reconcentration, supra note 4.

[22]     See, e.g., City of Holyoke Gas & Electric Dept. v. FERC, 954 F.2d 740, 743 (D.C. Cir. 1992) (“Since it is already doing the relevant calculation, it is a small matter to abide by the injunction of the arithmetic teacher: Show your work! For the Commission to do less deprives the [consumer] of a rational explanation of its deci­sion.”).

[23]     Id.

[24]     It should be noted, however, that the FCC’s challenge is made more complex because telecommunications is clearly an industry characterized by rapid change and innovation. This challenge is now exacerbated with the passage of the Telecommunications Act of 1996. See Reorienting Economic Analysis, supra note 4, at 32 and citations therein; Reconcentration at 18-19; see also Turner Broad­casting System, Inc., v. FCC, 117 S. Ct. 1174, 1189 (1997) (regulato­ry schemes concerning telecommunications have “special signifi­cance” because of the “inherent complexity and assessments about the likely interaction of industries undergoing rapid economic and technological change”); Denver Area Educational Telecommunica­tions Consortium, Inc., v. FCC, 116 S. Ct. 2374, 2385 (1996) (Court is “aware . . . of the changes taking place in the law, the technology, and the industrial structure, related to telecommunications, see, e.g., Telecommunications Act of 1996 . . . .”); Columbia Broadcasting, Inc v. Democratic National Committee, 412 U.S. 94, 102, 93 S. Ct. 2080, 2086 (1973) (“The problems of regulation are rendered more difficult because the . . . industry is dynamic in terms of technological change”); FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 138 (1940) (“Communications Act is not designed primarily as a new code for the adjustment of conflicting private rights through adjudica­tion. Rather it expresses a desire on the part of Congress to maintain, through appropriate administrative control, a grip on the dynamic aspects” of the telecommunications industry).

[25]     FCC v. RCA Communications, Inc., 346 U.S. 86, 93-95 (1953); Northeast Utils. Serv. Co. v. FERC, 993 F.2d 937, 947-48 (1st Cir. 1993) (public interest standard does not require agencies “to analyze proposed mergers under the same standards that the [DOJ] . . . must apply” because administrative agency is not required to “serve as an enforcer of antitrust policy in conjunction” with the DOJ or FTC; thus, while agency “must include antitrust considerations in its public interest calculations . . . it is not bound to use antitrust principles when they may be inconsistent with the [agency’s] regulatory goals”). See also National Broadcasting Co. v. United States, 319 U.S. 190, 219 (1943) (Congress, through the Communica­tions Act, “gave the Commission not niggardly but expansive powers.”); Craig O. McCaw, Memorandum Opinion & Order, 9 FCC Rcd. 5836 (1994) at ¶ 7, aff’d, SBC Communications v. FCC, 56 F.3d 1484 (D.C. Cir. 1995) (FCC’s “jurisdiction under the Communi­cations Act gives us much more flexibility and more precise enforcement tools that the typical court has”).

[26]     Town of Concord v. Boston Edison Co., 915 F.2d 17, 22 (1st Cir. 1990) (Breyer, J.), cert. denied, 499 U.S. 931 (1991).

[27]     Id. Accord United States v. FCC, 652 F.2d 72, 88 (D.C. Cir. 1980) (“basic goal of direct governmental regulation through administrative bodies and the goal of indirect governmental regula­tion in the form of antitrust law is the same—to achieve the most efficient allocation of resources possible”); see also Hausman supra note 13 (“The public interest standard should recognize economic efficiency as one of its primary goals. Economic efficiency implies not assessing unnecessary costs on U.S. consumers and firms.”).

[28]     See United States v. AT&T, 498 F. Supp. 353, 364 (D.D.C. 1980) (Green, J.) (it is “not appropriate to distinguish between Communica­tions Act standards and antitrust standards” because “both the FCC, in its enforcement of the Communications Act, and the courts, in their application of the antitrust laws, guard against unfair competi­tion and attempt to protect the public interest”).

[29]     See Reorienting Economic Analysis, supra note 19, at 35 & n.32 & citations therein. That is to say, from a public policy perspective, not all impediments to entry are necessarily barriers to entry that require some type of government intervention or remediation. Thus, when analyzing whether a particular structural characteristic is a “policy-relevant” barrier to entry, policy makers will have to engage in a cost-benefit analysis that identifies, inter alia: (1) all possible economic efficiencies, if any, that might result from the presence of the barrier to entry; (2) all offsetting economic efficiencies that might be attributable to the barrier to entry, if any; (3) all relevant positive and negative network externalities; and (4) the estimated economic cost of eliminating the barrier to entry or minimizing its effects. Id.

[30]     For example, while ESPN, CNN, HBO or Showtime appropriate­ly should not be considered to be an “essential facility” under the antitrust laws, without these popular channels, new entrants will find it extremely difficult to establish a viable, rival distribution system for delivered multichannel video programming. As such, Congress in the 1992 Cable Act required, inter alia, parties to an exclusive programming distribution contract to demonstrate that such contract is in the public interest. See 47 U.S.C. § 548. When undertaking this review—just like under antitrust precedent—the Commission must weigh the procompetitive benefits of an exclusive distribution contract against its likely anticompetitive harms. Evidence has borne out that this short-term regime has contributed significantly to the deconcentration of the MVPD market. See James Olson & Lawrence Spiwak, Can Short-Term Limits on Strategic Vertical Restraints Improve Long-Term Cable Industry Market Performance?, 13 Cardozo Arts & Ent. L.J. 283 (1994).

[31]     Again, as now Justice Breyer once wrote, an “antitrust rule that seeks to promote competition but nonetheless interferes with regulatory controls could undercut the very objectives the antitrust laws are designed to serve.” As such, where regulatory and antitrust regimes coexist, “antitrust analyses must sensitively ‘recognize and reflect the distinctive economic and legal setting’ of the regulated industry to which it applies.” Town of Concord, 915 F.2d at 22. See also Gulf States Utils. Co. v. FPC, 411 U.S. 747, 760  (1973) (“Consideration of antitrust and anticompetitive issues by [regulatory agencies,] moreover, serves the important function of establishing a first line of defense against those competitive practices that might later be the subject of antitrust proceedings.”).

[32]     See Easterbrook, supra note 7. But cf. Hoecker Cites “Misconcep­tions,” Electric Utility Week, Mar. 31, 1997 (reporting that now FERC Chair James Hoecker issued a “strong defense” for a continuing role for regulators in deregulated markets). According to Hoecker, some view the concept of “regulated competition [as] an oxymoron like ‘postal service’ or ‘airline food’. . . . [However,] I prefer to think of regulation as evolving into a guardian and guaran­tor of competition, instead of its substitute. ” (Emphasis supplied.)

[33]     For example, there are certain types of “procompetitive” regulation which, when properly constructed, can produce more public interest benefits than the economic costs the regulation imposes on the market. See, e.g., Part 68 of the FCC’s rules, 47 C.F.R. § 68.1 et seq., which, by requiring standard technical interfaces, permits competition in the terminal equipment market.

[34]     See Farmers Union Central Exchange, Inc. v. FERC, 734 F.2d 1486, 1504 (D.C. Cir.), cert. denied, 469 U.S. 1034 (1984) (the concept of “just and reasonable” must clearly be more than a “mere vessel into which meaning must be poured”).

[35]    See generally Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, reh’g denied, 509 U.S. 940 (1993); A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396, 1401 (7th Cir. 1989) (“Market structure offers a way to cut the inquiry [of potential, anticompetitive strategic vertical conduct] off at the pass . . . .”). See also F.M. Scherer & David Ross, Industrial Market Structure and Economic Performances (3d ed. 1990) (despite antitrust’s focus on structural measures such as the HHI, economic concentration is only one aspect of market structure; other relevant features of market structure include product differentiation, barriers to entry, cost structures, vertical integration, and diversification).

[36]    Public policy officials have a wide variety of regulatory tools in their arsenal to create procompetitive, forward-looking regulatory paradigms or antitrust consent decrees. These tools include price regulation, where government limits the maximum amount of money a regulated firm may charge consumers (e.g., “rate-of-return,” “price cap,” “universal service” at subsidized rates, or special pricing plans for low income or low volume users); conduct regulation (e.g., line of business restrictions, reporting requirements, and extended or asymmetrical notice and comment periods before any new rate can go into effect); and structural regulation (e.g., some degree of mandatory separation between regulated and non-regulated businesses to protect against affiliate self-dealing or other related concerns). However, structural separation is not a homogenous regulatory or antitrust enforcement tool. Rather, like all forms of economic regulation, structural separation is question of degree: the stricter the regulatory requirement of “separateness,” the higher the cost to the regulated firm. As such, depending on the specific regulatory harm to be mitigated, or particular long-term market structure regulators may want to achieve, “structural separation” generally takes on four primary forms (each of which is listed in order of most significant economic costs to least imposed economic costs): (1) “line-of-business” restrictions; (2) mandatory separate subsidiaries with outside equity participation; (3) wholly-owned separate subsidiaries; and (4) mandatory separate corporate divisions. As a regulatory alternative to strict structural separation, however, it is also possible to impose strict accounting requirements accompanied by various conduct restrictions or mandates.

[37]     See Reorienting Economic Analysis, supra note 19, at 34-36 & citations therein; see also In re Competition in the Interstate Interexchange Marketplace, 6 FCC Rcd. 5880 (1991) at ¶ 80 (finding that when there is no economic nexus between regulations imposed and current market conditions, regulation can have a variety of adverse effects on market performance, including, inter alia: (1) denying a firm flexibility to react to market conditions and customer demands; (2) regulatory delays and uncertainty which reduce the value of a firm’s service offerings; (3) affording competitors advanced notice of another firm’s price and service changes which fosters a “reactive market, rather than a proactive one,” and thus reduces the incentives for firms to “stay on their competitive toes”; and (4) negating, in whole or in part, a heavily-regulated firm’s incentive and ability to become a “first-mover” in the market).

[38]     See, e.g., Clamp-All Corp v. Cast Iron Soil Pipe Institute, 851 F.2d 478, 484 (1st Cir. 1988), cert. denied, 488 U.S. 1007 (1989) (Breyer, J.) (rejecting argument that antitrust policies warrant the imposition of stringent conditions to remedy interdependent pricing, “not because [interdependent] pricing is desirable (it is not), but because it is close to impossible to devise a judicially enforceable remedy for ‘interdependent’ pricing. How does one order a firm to set its prices without regard to the likely reactions of its competi­tors?”); In re Motion of AT&T Corp. to Be Reclassified as a Non‑Dominant Carrier, FCC 95‑427, 11 FCC Rcd. 3271 (1995) at ¶ 32 (“When the economic costs of regulation exceed the public interest benefits, the Commission should reconsider the validity of continuing to impose such regulation on the market.”); see also Joseph Kattan, Beyond Facilitating Practices: Price Signaling and Price Protection in the New Antitrust Environment, 63 Antitrust L.J. 133, 136 (1994); Nina Cornell, Peter Greenhalgh & Daniel Kelley, Social Objectives and Competition in Common Carrier Communica­tions: Incompatible or Inseparable?, Federal Communications Commission OPP Working Paper No. 1 (1980); John Haring & Kathleen Levitz, What Makes the Dominant Firm Dominant?, Federal Communications Commission OPP Working Paper No. 25 (1989).

[39]     United States v. FCC, 652 F.2d 72, 81-82 (D.C. Cir. 1980) (en banc) (quoting Northern Natural Gas Co. v. FPC, 399 F.2d 953, 961 (D.C. Cir. 1968)). See also FCC v. National Citizens Comm. for Broad., 436 U.S. 775, 795 (1978); Gulf States Utils. Co. v. FPC, 411 U.S. 747, 755-62 (1973) (regulatory agencies must consider “matters relating to both the broad purposes” of their enabling statutes “and the fundamental national economic policy expressed in the antitrust laws”); FCC v. RCA Communications, Inc., 346 U.S. 86 (1953) (“There can be no doubt that competition is a relevant factor in weighing the public interest.”).

[40]     See Reorienting Economic Analysis, supra note 19, at 33-35 & n.33 and citations therein.

[41]     See Scherer & Ross, supra note 35, at 4-5.

[42]    See Reorienting Economic Analysis, supra note 19, at 35-36 & n.33; Market Reconcentration, supra note 4; see also Walter Adams, Public Policy in a Free Enterprise Economy, in The Structure of American Industry (7th ed. 1986, Walter Adams, ed.) (primary purpose of economic public policy paradigms should be to “perpetu­ate and preserve, in spite of possible cost, a system of governance for a competitive, free enterprise economy” where “power is decentral­ized; . . . newcomers with new products and new techniques have a genuine opportunity to introduce themselves and their ideas; . . . [and] the ‘unseen hand’ of competition instead of the heavy hand of the state performs the basic regulatory function on behalf of society”).

[43]     See generally David Evans & Richard Schmalensee, A Guide to the Antitrust Economics of Networks, Antitrust, Spring 1996, at 36, 38. The authors explain that because many network industries are characterized by high fixed costs and low marginal costs, firms that price at marginal cost “would not recover their fixed costs, which are often the costs of developing innovative new products and services. To survive, they have to price well in excess of marginal cost. And, since they are making a profit at the margin on almost every unit, they often engage in price discrimination such as volume discounts, special deals, and complex pricing systems.”

[44]     See Reorienting Economic Analysis, supra note 19, at 35-36 & n.35; Hausman, supra note 13 (“Because of significant economies of scale and scope, the first best prescription of setting price equal to marginal cost would require government subsidies or would lead to bankruptcy of local phone companies. In the U.S., government subsidies have not been used, and regulators have set price in excess of marginal cost for some services to allow regulated telephone companies to cover their fixed and common costs and to provide a subsidy to basic residential service. ” (citations omitted and emphasis supplied)); see also Stephen Martin, Industrial Economics: Economic Analysis and Public Policy 16 (1988) (“[perfect] competition is a Shangri-La up to which no real‑world market can measure”).

[45]     See, e.g., Cincinnati Bell Tel. Co. v. FCC, 69 F.3d 752, 760 (6th Cir. 1995) (reversing Commission decision because the order contained no “expert economic data, or [analogies] to related industries in which the claimed anticompetitive behavior has taken place” but instead justified its conclusions as “simply ‘common sense’ ”).

[46]     See RCA Communications, 346 U.S. at 93-95 (Frankfurter, J.) (FCC’s economic analysis may not primarily rely on a “reading of national policy” because agency’s actions were simply “too loose and too much calculated to mislead in the exercise of the discretion entrusted to it”); cf. El Paso Elec. Co. and Central and South West Servs. Inc., 68 F.E.R.C. ¶ 61,181 (1994), where FERC concluded that the “national interest” was to establish a “competitive bulk power market” and that it would, therefore, “be a detriment to the national interest to allow mergers or consolidations that do not offer compara­ble transmission access,” FERC held that it could no longer “find any newly filed merger consistent with the public interest if the merging public utilities do not offer comparable services, whether or not that merger results in an increase in market power. ” (Emphasis supplied.) Unfortunately, because the “voluntary” commitments imposed by FERC essentially made the deal uneconomical, the parties subse­quently abandoned the transaction which, naturally, resulted in years of costly litigation.

[47]     See, e.g., Northern Natural Gas v. FPC, 399 F.2d 953, 961 (D.C. Cir. 1968) (“In short, the antitrust laws are merely another tool which a regulatory agency employs to a greater or lesser degree to give ‘understandable content’ to the broad statutory concept of the ‘public interest.’ ”). But cf. FERC Chair Hoecker Delivers Scary Halloween Message for Industrials, Foster Electric Report, No. 125 (Nov. 5, 1997) (reporting that FERC Chair Hoecker argued that “regulated competition” is wholly appropriate because FERC will not “race headlong towards ‘de-regulation’ that is based largely on untested theories about the behavior of competitive markets ” (emphasis supplied)).

[48]     Reorienting Economic Analysis, supra note 19, at 34. See also Harold Demsetz, Barriers to Entry, 72 Am. Econ. Rev. 37‑47 (1982); William J. Baumol et al., Contestable Markets and the Theory of Industry Structure 362 (1988).

[49]     See Easterbrook, supra note 7, at 15-16 (“[P]eople demand laws just as they demand automobiles, and some people demand more effectively than others. Laws that benefit the people in common are hard to enact because no one can obtain very much of the benefit of lobbying for or preserving such laws.” As such, because “cohesive groups can get more for themselves by restricting competition and appropriating rents than by seeking rules that enhance the welfare of all . . . we should expect regulatory programs and other statutes to benefit the regulated group. . . .” Accordingly, these groups “need not ‘capture’ the programs, because they owned them all along. The burgeoning evidence showing that regulatory programs increase prices for consumers and profits for producers supports this understanding. ” (emphasis supplied and citations omitted)); see also George Stigler, The Theory of Economic Regulation, 2 Bell J. Econ. & Mgmt. Sci. 2-21 (1971).

[50]     See, e.g., Turner Broad. Sys., Inc. v. FCC, 117 S. Ct. 1174, 1204 (1997) (Breyer, J., concurring) (the “anticompetitive rationale” of majority’s opinion upholding federal statute that cable companies “must carry” local broadcast stations has no economic basis; rather, Congress’s clearly articulated “public interest” objectives contained in the Cable Act of 1992 are sufficient grounds to uphold the rules); Richard Posner, Taxation by Regulation, 2 Bell J. Econ. & Mgmt. Sci. 22, 47 (1971) (“[I]f we are stuck with taxation by regulation,” then agencies and reviewing courts should insist that the “amount and cost of the subsidy, together with the identity of the recipients and payors, be calculated and placed in the public record.” While this approach might “eliminate some of the more captious instances of the phenomenon; at least it would bring an important issue of public policy out in the open.”).

[51]     See Scherer & Ross, supra note 35, at 9.

[52]     See Posner, supra note 5 (while debate over the purpose and effect of regulation usually revolves around arguments that regulation either: (a) is needed to protect captive consumers; or (b) is procured only by “politically effective groups which are assumed to be members of the regulated industry itself for their own protection,” neither view “explains an important phenomenon of regulated industries: the deliberate and continued provision of many services at lower rates and in larger quantities than would be offered in an unregulated market or, a fortiori, in an unregulated monopolistic one”).

[53]     Market Reconcentration, supra note 4, at 24 & n.25; see also Easterbrook, supra note 7; Stigler, supra note 49.

[54]     Moreover, the desire to achieve “competition without change” is not limited to the protection of inefficient rivals. In the effort to ease consumers’ “transition to competition,” very often regulated firms must accept “voluntary” conditions if they want to become “deregulated” so as to mitigate any potential consumer “rate shock” when prices are actually set using unfettered market forces. See AT&T Domestic Non-Dom. Petition, supra note 38, at ¶ 84.

[55]     One of the counter-arguments to this position is the often misguided notion that the naked “protection of competitors” is analytically the equivalent to attempting to promote tangible new entry into a market currently dominated by a monopoly incumbent. It is not. As the FCC’s former chief economist recently argued, it is very “important that the playing field should be leveled upwards, not downwards” because “rules that forbid a firm from exploiting efficiencies just because its rivals cannot do likewise” do nothing but harm, rather than improve, consumer welfare. Joseph Farrell, Creating Local Competition, 49 Fed. Comm. L.J. 201, 212 (1996).

[56]     Brunswick Corp. v. Pueblo Bowl‑O‑Mat, Inc., 429 U.S. 477, 488, 97 S. Ct. 690, 697, 50 L. Ed. 2d 701 (1977) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S. Ct. 1502, 1521, 8 L. Ed. 2d 510 (1962)).

[57]     Cf. Ohio Edison Co. et al., 80 F.E.R.C. ¶ 61,039 (1997) (FERC gave merger applicants Faustian regulatory choice of either proceed­ing directly to a trial-type evidentiary hearing (i.e., regulatory delay) or proposing “measures to potential market power problems” (i.e., make competitors, rather than consumers, better off) such as limiting internal transmission capability for other suppliers’ use (i.e., sacrifice its own system reliability for rivals’ benefit) or building new transmission systems, not for its own needs, but to “substantially increase the amount of power than can be delivered to destination markets from alternative suppliers” (i.e., if you don’t have enough capacity to sacrifice to rivals without causing major power outages, then you must build this capacity for them) without either conducting a thorough economic analysis or discussing one potential off-setting efficiency benefit of the merger). But cf. Entergy Servs., Inc. & Gulf States Utils. Co., 64 F.E.R.C. ¶ 61,001 (1993), where FERC specifically declined to impose “network” service as a condition (voluntary or involuntary) of a merger. According to FERC, its conditioning authority should be appropriately limited to “remedying anticompetitive harms that result directly from the proposed merger, not mere competitive disadvantages that may have existed prior to the merger ” because it was expressly “prohibited from conditioning a merger to affirmatively place competitors in a better position than they would be absent the merger without a showing of potential anticompetitive or other harm that would warrant a remedy.” Absent a clear “nexus between the merger application and the alleged anticompetitive harm, if any, to the complainant,” therefore, FERC held that if it “ordered network service as a condition of the merger, [then it] would not be maintaining the competitive status quo as [it is] legally required to do under section 203(a) of the F.P.A., but would, in fact, be changing the competitive status quo” and, as such, would exceed its statutory authority to impose conditions. (Emphasis supplied and citations omitted.)

[58]    111 F.2d 1014, 1016 (9th Cir. 1940).

[59]    Id. But cf. Applications of NYNEX Corporation and Bell Atlantic Corporation for Consent to Transfer Control, Memorandum Opinion & Order, FCC 97-286 (rel. Aug. 14, 1997) at ¶ 2, where rather than require applicants to demonstrate that a proposed merger was in the public interest because the transaction would, for example, generate efficiency savings that could be passed on to consumers, or at least make the merged entity a more effective competitor, the FCC stated that “[i]n order to find that a merger is in the public interest, we must . . . be convinced that it will enhance competition. A merger will be pro-competitive if the harms to competition . . . are outweighed by the benefits that enhance competition. If applicants cannot carry this burden, the applications must be denied.” (Emphasis supplied.)

[60]     498 F.2d 771 (D.C. Cir. 1974).

[61]     Id. at 775-76.

[62]    SBC Communications, 56 F.3d at 1491 (citing Hawaiian Telephone, supra; W.U. Telephone Co. v. FCC, 665 F.2d 1112, 1122 (D.C. Cir.1981) (“equalization of competition is not itself a sufficient basis for Commission action”)).

[63]     FERC officials have apparently unwittingly conceded this point as such. See Foster Electric Report, supra note 47 (reporting that FERC intends to “expand upon certain themes” such as “considering whether to revise or enlarge the pro forma tariffs to allow for product and service innovations”).

[64]     See supra notes 47 & 57.

[65]     See, e.g., Mandel et al., supra note 12; Cam Simpson, Merger Mania Has Awakened Utility Industry, The Indianapolis Star/Indianapolis News, Feb. 3, 1997; Margie Hyslop, Electricity Dereg May Not Lower Rates, Montgomery J., June 4, 1997, at A1; Agis Salpukas, Utility Deregulation: Boon or Boondoggle?, N.Y. Times, Feb. 1, 1997, at Section D; Peter Coy, Utilities: Prognosis 1997, Business Week, Jan. 13, 1997, at 118; Hiram Reisner, Big Business Wins, Homeowners Lose Louisiana Competition Study Shows, Electric Utility Business & Finance, Oct. 7, 1996, at 2 (“In terms of the economy as a whole, the benefits of expected lower prices for industrial customers do not offset the reduction in dispos­able income due to higher residential rates.” As such, the state should expect to see “an overall reduction in personal income, retail sales, tax revenues, and economic output ” (emphasis supplied)); see also L. Spiwak, Utility Entry into Telecommunications, supra note 6.

[66]     See Janet Reno et al. v. American Civil Liberties Union, 117 S. Ct. 2329, 2337-38 (1997) (Telecommunications Act of 1996 was “an unusually important legislative enactment” because its “primary purpose was to reduce regulation and . . . to promote competition in the local telephone service market, the multichannel video market, and the market for over‑the‑air broadcasting”).

[67]    See Reorienting Economic Analysis, supra note 19, at 34 & n.20 and citations therein; see also Baumol et al., supra note 49. It should also be noted that the inclusion of universal service provisions into the recently concluded WTO accord was an extremely high priority for the U.S. As such, I guess we can all sleep just a little bit better knowing that with this accord, the U.S. helped ensure that all of the children of the world could sing together in the spirit of harmony and peace for years to come.

[68]    See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report & Order, FCC 97-157 (rel. May 8, 1997) at ¶¶ 794-96.

[69]     See Hausman, supra note 13.

[70]     What is particularly disturbing about this scenario is the fact that this exact type of non-price competition is one of the major reasons why it is highly unlikely that long-distance carriers can successfully engage in some sort of tacit collusion under current market condi­tions. See Reorienting Economic Analysis, supra note 19, at 35.

[71]    Perhaps if Congress is really so concerned about wiring the schools, a direct tax credit may be a better way to go—i.e., there is no multi-billion dollar slush-fund floating around somewhere, there are minimum compliance, enforcement and distribution costs, we eliminate the “middle man” (i.e., another government bureaucracy) and carriers can get direct positive public-relations benefits from the whole endeavor. This approach might even encourage entry! I’m sorry, but a multi-billion dollar fund creates just too many incentives for nefarious behavior.

[72]     See Scott Cleland, Subsidy Reform—Big Skunk at the Competition Picnic?, Telecom Watch (Wash. Research Group, Apr. 25, 1997) (“FCC’s subsidy reform of universal service and access charges will prove to be a larger impediment to the development of local competi­tion than most appreciate.”); Samuelson, supra note 13 (while Universal Service’s “educational benefits may be phantom . . . the higher overall phone rates needed to pay for them aren’t”; moreover, while the “subsidies for the poor may be justified[,  t]he rural subsidy isn’t. If people prefer to live in rural Montana, they should enjoy the pleasures and bear the costs.” (emphasis supplied)).

[73]    See James C. Miller et al., Industrial Policy: Reindustrialization Through Competition or Coordinated Action? 2 Yale J. on Reg. 1, 5 (1984).

According to Adam Smith, mercantilism “retards, instead of acceler­ating, the progress of the society towards real wealth and greatness; and diminishes, instead of increasing, the real value of the annual produce of its land and labour” because of two basic reasons: a tendency of special interests to turn government programs to their own narrow advantages, and a tendency of joint business efforts to result in collusion to reduce output and raise prices, especially when government willingly permits such collusion. As such, although “the law cannot hinder people of the same trade from sometimes assem­bling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.” (Citations omitted.) It would seem, therefore, that “FCC” should not stand for “Facilitating Cartels and Collusion.”

[74]     See Catherine Yang, Commentary: When Protectionalism Wears Camouflage, Business Week, June 2, 1997, at 60.

[75]     See, e.g., Miller, supra note 16 (doctrine of “neo-mercantilism” can be characterized as the principle that “in a world of monopolies, the nation with the biggest and strongest industries and firms can reign supreme and recoup for the mother country the supra-competi­tive profits earned from abroad”).

[76]     See Paul Magnusson, Getting a Grip on Trade Sanctions, Business Week, Nov. 17, 1997, at 115. Magnusson reports that in the past four years, President Clinton has signed 62 laws and executive actions targeting 35 countries. These numbers account “for more than half the sanctions imposed [by the U.S.] in the past 80 years.” Moreover, Magnusson reported that the direct cost to U.S. exporters in lost sales in 1995 alone was as high as $20 billion, an estimated 250,000 U.S. jobs disappeared and “no one can measure the damage to relations with angry allies.” (Emphasis supplied.)

[77]     See Antitrust Law Developments (Fourth) 991 (A.B.A. 1997).

[78]     See supra note 39.

[79]     See SBC Communications v. FCC, 56 F.3d 1484 (D.C. Cir. 1995).

[80]     As noted in note 76 supra, the rise of neo-mercantilism is clearly originating from the Executive Branch. See generally Clay Chandler, Will the [National Economic Council] Continue to be Clinton’s Neglected Child?, Wash. Post, Nov. 9, 1996, at H01, reporting that President Clinton often rewarded advisors seeking to circumvent the NEC and the specific advice of his chief economist, Laura D’Andrea-Tyson—e.g., when USTR Ambassador Mickey Kantor pushed Clinton directly to take a much tougher line with Japan in a dispute over auto exports. Just to refresh everyone’s collective recollection, this was the dispute where, at Detroit’s urging, the U.S. threatened to slap a 100% tariff on all Japanese luxury cars—thus potentially throwing thousands of Americans who work at Lexus and Infinity dealerships out of jobs—if Japan did not permit Detroit to sell its cars in Tokyo. As this passion play was carried out, however, all of the Mercedes, Porche, BMW, Saab, Volvo, Jaguar, et al. dealerships were standing in the wings, chuckling at the notion that Detroit manufac­turers actually believed that only they would gain U.S. market share if the U.S. government removed their Japanese rivals from the market.

See also Bob Woodward & Ann Devroy, An Unusual Meeting of Chief Executives, Wash. Post, Aug. 21, 1997, at A01 (reporting that when Tyson, fearing a trade war between Washington and Tokyo, objected to private, one-on-one meeting between President Clinton and Federal Express Chairman Fred Smith (who, along with Fed Ex, coincidentally just donated $275,000 to the Democratic National Committee) to discuss Fed Ex’s trade concerns with Japan, D’Andrea-Tyson’s objections were specifically overridden by former Clinton Chief of Staff and close personal friend Thomas “Mack” McLarty).

[81]     FTC v. Staples, Inc. and Office Depot, Inc., 1997-2 Trade Cas. (CCH) ¶ 71,867 (1997).

[82]     See Thomas G. Dolan, Editorial Commentary: The Antitrust Delusion—The Federal Trade Commission Explains it All to You, Barrons, July 7, 1997, at 46 (FTC’s decision is nothing more than “a pathetic substitution of harassment for regulation”).

[83]     See, e.g., Steven Pearlstein & Anne Swordson, U.S. Gets Tough to Ensure Boeing, McDonnell Merger: Retaliation Plan in Works as Europe Threatens, Wash. Post, July 17, 1997, at D1.

[84]     See Yang, supra note 74 (U.S. and EU’s antitrust actions in this case acted as “a stalking horse for economic nationalism. When that happens, the first casualty is competition”).

[85]     In fact, the FCC’s International Bureau now has its own official “International Trade Division.”

[86]     In re Market Entry and Regulation of Foreign-Affiliated Entities, FCC Docket No. 95-475 (rel. Nov. 30, 1995) (“ECO Order ”). Without going into great detail here, one of the primary motivations behind ECO and its progeny are U.S. carriers’ concerns that: (a) under the existing international settlement of accounts regime, the U.S. traffic imbalance effectively forces U.S. firms to subsidize—via above-cost settlement rates—foreign firms’ activities; which subsidy (b) allegedly permits foreign firms to build a “full-circuit” and therefore bypass the international settlements of accounts regime (i.e., provide IMTS service at lower cost); and because (c) the ability for any firm to achieve lower costs must a fortiori be “anticompetitive,” the U.S. government should make it as difficult as possible for foreign firms to enter the U.S. market. This “victim” mentality is a bit disingenuous, however, given the facts that U.S.-based carriers are not the only ones faced with large settlement imbalances. For example, Japan-based carriers have large deficits with Taiwan, the Philippines, South Korea, Singapore, and other major Asian coun­tries. Similarly, France Telecom has large outflows to Africa, the Middle East, and even Latin America. Moreover, the same holds true for British Telecom, Deutsche Telekom, Telecom Italia, and other large overseas telephone companies. See International Communica­tions Survey Memorandum Re: Addressing the “Accounting Rates Challenge,” Telecommunications Pol’y Rev., Jan. 5, 1997.

[87]     Tragically, FERC has also adopted a naked reciprocity approach with regard to cheap Canadian hydro-electric power. See, e.g., Promoting Wholesale Competition Through Open-Access Non-Discriminatory Transmission Services by Public Utilities, 79 F.E.R.C. ¶ 61,367 (1997) (“[P]ublic interest” did not favor granting Ontario Hydro’s request for stay of reciprocal “open-access” transmission tariff requirement because “a stay would unfairly permit Canadian utilities to compete in U.S. markets, but deprive U.S. utilities of the opportunity to likewise compete in Canadian markets. This unequal treatment could detrimentally affect the financial well-being of U.S. public utilities”).

[88]     The Commission stated that it would examine under the ECO standard: (1) whether U.S. carriers can offer in the foreign country international facilities‑based services substantially similar to those the foreign carrier seeks to offer in the United States; (2) whether competitive safeguards exist in the foreign county to protect against anticompetitive and discriminatory practices; including cost allocation rules to protect against cross subsidization; (3) the availability of published, non-discriminatory charges, terms and conditions for interconnection to foreign domestic carriers’ facilities for termination and origination of international services; (4) timely and non-discrimi­natory disclosure of technical information needed to interconnect with carriers’ facilities; (5) the protection of carrier and customer propri­etary information; and (6) whether an independent regulatory body with fair and transparent procedures is established to enforce competitive safeguards. See ECO Order, ¶ 40.

[89]     See ECO Order, ¶¶ 21, 40.

[90]     See id. ¶ 36.

[91]     Id. (emphasis supplied). This definition of market power is especially odd given the FCC’s use of the static equilibrium proper­ties of perfect competition as the benchmark by which to measure performance in the telecommunications industry. Any action by a firm, other than the mechanistic production of homogenous output up to the point where price equals marginal cost, is considered “anticompetitive” in the model of perfect competition. Under their own standard, “anticompetitive” behavior would therefore include advertising, quality improvements, discounted prices, and other common business activities that often enhance consumer welfare. Accord McNulty, supra note 2.

[92]     ECO Order, ¶¶ 60-61.

[93]     Id. ¶ 227.

[94]     Id. ¶ 240. Unfortunately, the U.S. has apparently continued this “neo-mercantilist” policy—although now slightly more sophisticatedly disguised (e.g., ECO is over; yet the U.S. must nonetheless look at the state of competition in foreign markets)—right through the time of this writing, in spite of the recently concluded World Trade Organization agreement on international telecommunications. See, e.g., Reed Hundt & Charlene Barshefsky, FCC Isn’t Backpedaling on Telecommunications Deal, N.Y. Times, Aug. 17, 1997, at F36 (“We never agreed to open the American market to anticompetitive tactics by foreign carriers”); EU Presses U.S. to Change Telecom Rules, Reuters (Aug. 5, 1997, 8:55 am EDT) (reporting that EU issued official statement warning that U.S. “risks violating its world trading obligations” if it continues with mercantile-type policies—i.e., FCC continues policy of maintaining “broad and unclear public [interest] factors regarding foreign participation in U.S. domestic telecommuni­cations market” and, in particular, the fact that FCC allows factors such as law enforcement, foreign policy or trade concerns to be taken into consideration, as well as accepting the ill-defined concept of “very high risk to competition” as a reason for a license refusal); Albert P. Halprin, Two Steps Backwards on Open Markets, N.Y. Times, July 20, 1997, at F13 (“FCC, citing the supposed require­ments of Federal communications law, is . . . backpedal[ing] on major American commitments in the deal. If our nation fails to live up to its end of the bargain, so will other signatories, and this historic opportunity will be lost”).

[95]     See Hundt & Barshefsky supra note 94 (“FCC will continue to show deference to the executive branch on matters concerning foreign policy and trade . . . ” and the “executive branch fully supports this view”).

[96]     See Miller et al., supra note 73. In fact, given the Administration's recent willingness to call out the U.S. Coast Guard to enforce reciprocity policies against Japan, somebody might even get physically hurt as well. After all, it really is rather difficult to have a true “trade war ” unless some kind of violence is actually involved. See, e.g., Paul Bluestein, U.S. Plans to Ban Ships, Pushed Japan to Act, Wash. Post, Oct. 19, 1997, at AO1.

[97]     See Miller, supra note 16; see also Halprin, supra note 94 (FCC simply “wants to keep its ability to treat foreign carriers worse than its own domestic carriers—though this is exactly what the United States and 68 countries in Geneva promised not to do”—and a policy that will “delay other nations’ entry into our market by months, if not years, while allowing identical investments by U.S. carriers to proceed immediately. Free trade delayed is free trade denied. ” (emphasis in original and supplied)).

[98]     For example, take the hypothetical case (although loosely based on truth) where a foreign country, after nationalizing substantial sunk assets, simply informed its investors that while it is a poor country (and therefore has no money to compensate its investors with), it nonetheless wanted to compensate its investors with its leading export: canned corned-beef. As such, the country provided its investors with a large container ship filled to the brim with canned corn beef which the investors were supposed to sell on the open market for whatever amount they could get.

[99]     See Robert Eisner, A Free Trade Primer, Wall St. J., Oct. 13, 1997, at A22; Glassman, supra note 3 (“If we make it easy for Italy to export inexpensive shoes to us, the U.S. shoemakers may have to find work in other fields. But, meanwhile, the 260 million Americans who wear shoes everyday get a bargain. The money they save can be used to buy other things and start businesses, such as software, in which Americans have a clear advantage.”).

[100]                   See Miller, supra note 16 (citations omitted and emphasis supplied).

[101]                   Id.

[102]                   See Access Charge Reform, CC Docket No. 96-262, First Report & Order, 62 Fed. Reg. 31,040 (June 6, 1977), FCC Rcd., FCC 97-158, ¶¶ 275-82 (May 16, 1997) (structure of U.S. domestic market makes recoupment unlikely); ECO Order, ¶¶ 69-70 (because of both the bi-lateral nature of negotiations and the competitive pressures of the international market, it is still highly unlikely that a dominant foreign firm can “set the ‘input’ accounting rate level unilaterally”; as such, “[e]ven assuming arguendo that a dominant foreign carrier can unilaterally set an accounting rate” the structure of the IMTS market nevertheless indicates that “above-cost accounting rates on particular routes where a carrier has an affiliate on the foreign end [cannot] realistically jeopardize the ability of unaffiliated carriers to compete on those routes or in the U.S. international services market as a whole. Additionally, we believe the possibility of such harm is outweighed by the benefits of additional price and service competition that will result from further U.S. market entry. ” (emphasis supplied)).

[103]                   See U.N. Charter art. 2, ¶ 7; see also U.S. Department of Justice and Federal Trade Commission, Antitrust Enforcement Guidelines for International Operations § 3.2 & n.73 (1995) (both the DOJ and the FTC must consider the legitimate interests of other nations); Timberlane Lumber Co. v. Bank of America, 549 F.2d 597 (9th Cir. 1976).

[104]                   See Market Reconcentration, supra note 4, at 23 & n.26; see also Doug Galbi, Chief Economist, FCC Int’l Bureau, Model‑Based Price Standards for Terminating International Traffic, FCC Staff Paper, Room Document No. 10, OECD Ad Hoc Meeting on International Telecommunications Charging Practices and Procedures (Sept. 17, 1997) (proposing a model that any country can use to compute economically relevant price standards for termination by its international correspondents).

[105]                   See Hundt & Barshefsky, supra note 94 (“The FCC remains committed . . . to adopting fair rules that live up to American international commitments, while safeguarding the public interest and insuring full and fair competition in telecommunications markets in the United States. The executive branch fully supports this view.” (emphasis supplied)).

[106]                   See Hazlett & Ford, supra note 2.

[107]                   See Town of Concord v. Boston Edison Co., 915 F.2d 17, 21-22 (1st Cir. 1990), cert. denied, 499 U.S. 931 (1991) (“[A] practice is not ‘anticompetitive’ simply ‘because it harms competitors’—after all, the whole purpose of competition is to “advance a firm’s fortunes at the expense of its competitors.” Rather, “a practice is ‘anticompetitive’ only if it ‘harms the competitive process’ by obstructing the “achievement of competition’s basic goals—lower prices, better products and more efficient production methods.”); see also Ocean State Physicians Health Plan, Inc. v. Blue Cross & Blue Shield of R.I., 833 F.2d 1101, 113 (1st Cir. 1989), cert. denied, 494 U.S. 1027 (1990) (“[T]he desire to crush a competitor, standing alone, is insufficient to make out a violation of the antitrust laws. . . As long as [the defendants’] course of conduct was itself legitimate, the fact that some of its executives hoped to see [the plaintiff] disappear is irrelevant.”); Olympia Equipment Leasing Co. v. Western Union Tel. Co., 797 F.2d 370, 379 (7th Cir. 1986), cert. denied, 480 U.S. 934 (1987) (“[I]f conduct is not objectionably anticompetitive, the fact that it was motivated by hostility to competitors (‘these turkeys’) is irrelevant.”); Hawaiian Telephone v. FCC, 498 F.2d 771 (D.C. Cir. 1974) (“equity” considerations cannot substitute for thorough legal and economic analysis when invoking “competition” principles under the public interest standard).

[108]                   See Easterbrook, supra note 7 (those “who see economic transactions as zero‑sum games are likely to favor ‘fair’ divisions of the gains and losses”); see also Farrell, supra note 55; John Berresford, Future of the FCC: Promote Competition, Then Turn Out the Lights? 21-22 (Economic Strategy Institute, May 1997). Berresford states that the “playing field is never ‘even’ to begin with, and bringing in a lot of regulatory landscape architects and earth‑moving equipment will, in most cases, only postpone the emerging competition and the benefits it would bring to consumers.” Thus, once regulators start to level the playing field to be “fair” to one competitor, “all the other competitors will find something unfair to them and will want their valleys to be filled and their mountains and hills to be brought low. The process can become an endless one and, if carried to its logical conclusion, makes the regulator into a cartel manager. This guarantees jobs for the regulators, lawyers and lobbyists, and oligopoly for the so‑called competitors, but it will do little for consumers.”

[109]                   See also Glassman, supra note 3 (“We work in order to eat, not visa versa. In other words, an economy should, first and foremost, benefit consumers, not producers—individuals rather than the established interests of business and labor.”).

[110]                   See Dolan, supra note 82 (noting that when public criticism reaches this boiling point, “such criticism helps undermine the antitrust delusion and establishes the deeper truth that all antitrust cases are political first, based on economics last”); see also Eleanor M. Fox, Lessons From Boeing: A Modest Proposal to Keep Politics Out of Antitrust, Antitrust Report, Nov. 1997, at 19 (“the antitrust experts did their job, while the politicians trivialized antitrust, reinforcing the popular notion that any big case that matters is political”; moreover, “it doesn't have to be [this] way, but counteract­ing politicization requires heavy leaning against the wind”).

[111]                   See, e.g., Salpukas, supra note 65 (consumers were not aware that most of the alleged savings resulting from New Hampshire’s retail-marketing plan for electricity were “not the result of free-market competition or any economies of scale” that a new entrant might bring but rather stemmed “from state-mandated subsidies and from the willingness of . . . marketers to shave their profit margins to near zero to get a piece of the action.” As such, monthly bills “could bounce back up if the subsidies are phased out and [the] winners of the marketing battle reward themselves by taking a profit.” (emphasis supplied)); see also Scott Cleland, The “Real Story” Behind the FCC’s Subsidy Reform Decision? Telecom Bulletin (Wash. Research Group, May 9, 1997) (“[O]nly ‘escape route’ possible from the ‘political trap’ of appearing to be increasing the nation’s telephone rate burden to pay for new school subsidies” was for FCC to enter into a “last minute ‘deal’ with AT&T,” which, in “return for public promises from AT&T to pass on any access charge reductions to basic consumers for the first time in years, the FCC would decrease the local telcos’ price caps by an additional $750 million.” This “ ‘deal,’ combined with a slower phase-in of the new universal service fund, enabled the FCC to defensively claim ‘offsetting savings’ for both long distance and local customers to pay for the $3 billion in new subsidies.”).

[112]                   For example, because the Cable Television Act of 1992 regulates cable companies’ rates on a franchise-by-franchise basis, the economic compliance costs far out-weigh any conceivable public interest benefit (i.e., actual amount of refunds achieved are often de minimis—generally a couple of thousand dollars). Thus, if govern­ment is really so concerned about the ability of cable monopolies to gouge consumers over a few thousand bucks, then government should simply write consumers a check for this amount instead. More disturbing, however, is that this costly regime does absolutely nothing to improve the overall performance of the larger MVPD market. See In re Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Third Annual Report, FCC 96-496 (rel. Jan. 2, 1997) at ¶ 4. (“Local markets for the delivery of video programming generally remain highly concentrated, and structural conditions remain in place that could permit the exercise of market power by incumbent cable systems.” Thus, it remains “difficult to determine to what extent these markets will be character­ized over the long term by vigorous rivalry”). Accordingly, consum­ers are also pressuring lawmakers to explain why this regime has not produced any benefits. See, e.g., Ron Podell, Cable Company Hikes Rates, Montgomery J., May 21, 1997, at A1; Murdoch Plans Total Local Carriage From DBS Platform, Satellite Week, Apr. 14, 1997 (reporting that Commerce Committee Chairman Senator McCain (R-Ariz) held hearings on status of competition in MVPD market because he is “concerned that passage of the Telecom Act last year didn’t result in lower prices and more competition in the video market, particularly since telcos dropped plans to enter video distribution market”).

[113]                   As explained above, “neo-comps” a fortiori reject any criticisms that their policies are, in fact, barriers to entry. Well, perhaps this criticism may be over-reaching just a bit. “Neo-comps,” just like everyone else, love to proclaim that they want the doors open wide—the only problem with this statement is that they also want to say hello (and, if possible charge an entry fee) to everyone who walks by.