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Radical Thinker - Broadcasting & Cable

Radical Thinker

Hazlett's theories attract feds, repel broadcasters
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Two years ago, Tom Hazlett shocked and amused broadcasters by telling the government to abolish broadcast TV. The notion, circulated in his Financial Times
column, was so radical that the economist's suggestion was dismissed as Ivory Tower ranting.

Nobody's laughing now.

The feds aren't doing away with free over-the-air television. But the philosophy underlying Hazlett's thesis—that making room on the airwaves for new wireless communications is more important to the economy and society than protecting free TV—is gaining cachet. FCC staffers are trying to sell Congress a DTV-transition plan that puts a priority on reclaiming old analog TV channels, not on ensuring that TV viewers get HD pictures or other benefits of digital service. And that would trigger broadcasters' reversal of fortune.

"Broadcast TV is a niche player," says Hazlett, a former FCC economist whose iconoclastic theories appear in leading business journals. "Ninety percent of households are lining up every month to pay significant cable and satellite fees just to escape free broadcasting. Nothing more powerfully demonstrates the tremendous misallocation of a massive swath of radio spectrum."

Hazlett approaches his subject academically. He began teaching at the University of California, Davis, soon after he secured his PhD in 1984. His dissertation focused on new industries and markets and how they fare under regulation. Cable television, still in its early stages in the mid '70s, was one of his case studies. "I was intrigued by the cable market and its potential," he says. "From there, I started writing about broadcast and spectrum issues."

He left academia briefly in 1991-92 to spend a year at the FCC. Then he decided to become an advocate for telecommunications reform. After a stint at the American Enterprise Institute, he joined the Manhattan Institute, the New York-based conservative think tank. Founded in 1980 to push supply-side economics and welfare reform, the institute was an early advocate of hospital privatization and school vouchers.

Hazlett, convinced that federal regulation was stifling the telecommunications revolution's full potential, was home. "I decided to focus on policy analysis full-time," he says. Which explains why he counts wireless and computer companies and venture capitalists among his supporters.

But his detractors are equally vehement. Even discounting the importance of broadcast TV to the 15% of people who don't have cable, they say, Hazlett ignores the impact on cable news networks. They would lose a huge amount of local footage if stations went bust. "The use of spectrum for information services has been and will continue to be absolutely critical to functioning democracy," says David Donovan, president of DTV trade group Association for Maximum Service Television.

Still, the UCLA-trained economist is keeping up the pressure on broadcasters. After they attacked the FCC plan, Hazlett penned an op-ed piece for Capitol Hill trade paper The Hill. He accused stations of stalling the channel giveback and lamented the slow pace of technology introduction, charging that the FCC was too timid. (The government plans to take back only channels 52-69 and auction them to new users. Hazlett thinks all channels should be seized.)

Hazlett isn't oblivious to the political hopelessness of defeating broadcasters, one of the most powerful lobbies in Washington. That's why he wants to revive an idea that broadcaster Lowell "Bud" Paxson pushed three years ago. It lets tech firms that bid in TV- spectrum auctions pay UHF operators to exit early. Paxson's idea collapsed once Congress realized TV owners tried to cash in on channels they did not pay for.

In Hazlett's view, lawmakers' indignation was shortsighted. "People say it would have been a giveaway," he says. "Paxson is tying up enormous social value by holding on to those channels. It's far better for society that those airwaves be moved, so they produce something consumers are willing to pay for."

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