Minimal regulation plus innovation makes the spectacular commonplace.

I popped into a coffeeshop the other day to get my brain jump-started, and I saw a sign that stopped me cold: “No Wi-Fi.” That’s the history of the millennial era in two words: The day before yesterday there was no such thing as wireless Internet access. Then it became available, usually for a pretty stiff usage fee. (Remember the dark ages of having to rely on Boingo at the airport? Oh, wait . . . if you fly out of LaGuardia, you’re still in the dark ages. More about that in a minute.) Then wireless got so cheap that it became available as a courtesy in public spaces, and coffeeshops and the like began to offer it as a basic amenity, like restrooms or comfortable chairs. Up went the signs: “Free Wi-Fi.” Pretty soon, you could log on for free at McDonald’s while sucking down all 1,160 calories in your supersized shake. And then a funny thing happened: The “Free Wi-Fi” signs went away. The new sign was the invisible sign: “Of course we have wireless — what do you think this is, Waziristan?”


And now wireless Internet access has become so ubiquitous, so cheap, so convenient, that the odd establishment that for whatever economic or aesthetic reason declines to offer the amenity to its customers feels compelled to advertise the absence of what didn’t exist only a few years ago. It’s like a sign reading “No Public Restroom.”


The regulatory reform that led to the creation of wireless Internet connections — the brand name Wi-Fi became, for a while, something like “Levi’s” or “Xerox,” a generic name for a category of products, though that seems to have faded in favor of “wireless” — generally is dated to a 1985 decision by the FCC allowing unlicensed use of what is known as the ISM (industrial, scientific, medical) spectrum. In fact, the regulatory-reform process really began in 1938, shortly after the FCC’s founding, as Kenneth R. Carter of WIK-Consult GmbH explains in his paper “Unlicensed to kill: a brief history of the Part 15 rules.” The FCC was faced with two problems: The first is that practically every electronic device emits some kind of signal into the regulated spectrum; the second is that firms in the 1930s already were selling low-powered, short-range communication devices that technically encroached on the licensed spectrum. As the FCC’s chief engineer wrote in 1938, “If certain low power devices can be used without interfering with radio communications, there would appear to be no engineering reason for suppressing their use.”

That was during the Roosevelt administration. The wheels of regulatory reform move slowly, and it wasn’t until the Reagan administration that the FCC finally got around to promulgating the rules that made wireless Internet possible. The main problem the FCC faces in most of its regulatory endeavors, as Carter explains, is preventing a tragedy of the commons in the ether, which would manifest itself in high levels of signal interference. (One wades into this nest of techno-legal complications with some hesitancy; the issues are by no means open to obvious resolutions derived from political ideology.) If no limitations are placed upon the consumption of a common good, then there is no individual price to pay for consumption that reduces the overall social good. In theory, Carter argues, the FCC’s decision to allow unlicensed devices should have created a mess; in practice, the restriction of unlicensed use to low-powered devices has minimized the practical effects, keeping interference for the most part at trivial levels.


The FCC’s rules have their admirers and their critics, but in any case they provide an instructive example of the Hayekian observation that rules need not be perfect so long as they are predictable and stable. Once the 1985 regime was put into place, both private firms (notably AT&T) and public organizations (including Australia’sCommonwealth Scientific and Industrial Research Organization) went busily to work, engaging in the usual marketplace experimentation that is the source of most meaningful material progress. One of AT&T’s early partners was NCR Corp., the firm formerly known as National Cash Register, which developed a wireless product for point-of-sale systems. Some products succeeded, some failed, quality went up, prices went down, and wireless Internet became simply another unremarkable feature of the environment.



It could have turned out differently. The 1985 decision was not universally embraced. Some consumer-advocacy groups opposed it, and, probably more consequential, a number of radio-station trade organizations and electronic-equipment manufacturers opposed the decision as well, for their own self-interested reasons. We could still be living under the pre-1985 regime, and the world would be a very different place. For that matter, the FCC could have prevented the sale of microwave ovens, which also can interfere with licensed spectrum, and we’d still be popping popcorn in those weird old 1970s plastic-dome contraptions.

This story does not have a simplistically libertarian regulation bad/deregulation good moral, though regulation should be regarded warily, and in most cases the burden of evidence should be on the part of the regulators rather than the deregulators. There are better ways to regulate and there are worse ways to regulate. As Carter puts it: “The rules have been effective due to the fact [that] they focus on fundamental property: irradiated power is the direct cause of harmful interference. The rules establish parameters, not standards, allowing market forces to be free to operate within these constraints.”

But of course there are many sectors in American life in which market forces are not allowed to operate, or in which they operate under severe constriction. This is part of the reason why U.S. airports are, for the most part, such grim places, and in many cases bereft of amenities that may be found in many downmarket private locations. Airports operate under heavy regulation and in most instances under suffocating union control. A key difference between the United States and most of the rest of the developed world is that most U.S. airports are directly operated by government authorities, normally at the municipal level, whereas overseas the norm is for airports to be government-owned but privately operated by contractors. This is part of the reason that you so often have to be in the first-class lounge to enjoy free wireless and similar amenities normally available at McDonald’s. (Facility age is another factor: Politics is not the only reason that LaGuardia is a dump compared with Austin Bergstrom.)


Under our current arrangements, market forces are eliminated or excluded in more than half of all U.S. health-care transactions (and the president’s health-care reform, if it stands, will reduce the scope of real market activity radically), while in K–12 education, market forces are excluded in 90 percent of the transactions or more. It is not a coincidence that these are among the worst-performing sectors of American public life. The tragedy is that they are among the most important. Once the 1985 regime was in place, the development of wireless Internet and similar products ceased to be in the main a political problem and became an engineering problem. We have dysfunctional political institutions, but Americans are excellent at solving engineering problems. Where it is possible to do so, we reap extraordinary benefits from converting political problems into technical problems. But there is a very strong tendency among self-styled progressives to convert technical problems into political problems.


A very common talking point among those who advocate greater government management of the economy through “investments” in things such as alternative energy and electric cars is that, had it not been for a federal project, there would be no such thing as the Internet today. That is true, but it is for the most part trivially true. The Internet’s precursor is ARPANET, a Department of Defense project sponsored by DARPA and designed to facilitate communication among government- and university-based research computers, which were in the 1960s a scarce commodity. (It is folklore that ARPANET was designed to provide the military with a communication system that would withstand a nuclear attack, though that consideration did enter into later thinking.)

But ARPANET was deployed in 1969, and it was not until 1995 that the last restrictions on commercial use of the Internet were rescinded (though the rules had been liberalized considerably in the 1980s and 1990s). Like the emergence of wireless connectivity, the Internet itself required a stable, predictable regulatory regime and the reduction of regulatory barriers before it could become what it became. Bear in mind that it was only in 1993 that Mosaic hit the market, in effect making the World Wide Web commercially accessible. Less than 20 years on, the Web has become one of the most important facts of modern life, a world-changing source of information, productivity, and wealth. The U.S. government still pretty much looks like the U.S. government — worse, the executive branch of 2012 more closely resembles an administration from 1964 or 1978 than it does one from 1993.

The DOD was not the only government agency involved in the development of the Internet: Before founding Netscape, Marc Andreessen was employed by a federally funded project at the University of Illinois. But national defense is the quintessential public good, and one would spend a great deal of time searching for a free-market conservative, or even a hardcore libertarian, who would argue that defense-research spending is illegitimate. (One could more easily find one who believes that defense spending is too high — see, for instance, the byline on this article.) Likewise, even the most utopian of free-market idealists probably would concur that of all the things the public sector does (and generally does badly), sponsoring basic science research, particularly at the university level, ought to rank relatively high on the list of priorities. It is one thing for the DOD to develop a robust network to connect research computers, or for the University of Texas to fund the Center for Complex Quantum Systems just to see what the professors come up with; it is quite another for the Obama administration to pour taxpayers’ funds into particular private-sector firms (firms that just happen to be connected in many ways to influential Democratic donors) for the purposes of subsidizing particular products. Sending a man to the moon is a very different kind of exercise from marketing the Chevy Volt.


The critical thing is not that government engage in no research-and-development activity; indeed, the critical thing is that government does engage in research-and-development activity related to legitimate governmental ends, such as national defense and preventing the spread of disease, and that in all critical sectors market forces be allowed to work. We have cheap and nearly ubiquitous wireless Internet because DARPA and the FCC did their things, but Netscape and AT&T were permitted to do their things, too. The same cannot be said of our monopoly K–12 education system, or of our soon-to-be near-monopoly health-care system. The human costs of that fact are astounding, and they are everywhere to be seen.

— Kevin D. Williamson is a deputy managing editor of National Review.