THE GORDIAN KNOT: Political Gridlock on the Information Highway.

By W. Russell Neuman, Lee McKnight, and Richard Jay Solomon. MIT Press. 324 pp. $20

It has become a commonplace that telecommunications technologies and markets move much faster than the regulatory process, yet policymakers persist in trying to micromanage them. The latest example is the Telecommunications Act of 1996, which aimed to resolve issues left over from the AT&T breakup—in particular, to end the monopoly in the local telephone market. The congressional horse trading among entrenched interests produced a statute with a Byzantine patchwork of incentives and burdens. And, almost two years after the law’s enactment, there’s still very little competition in the local market.

The Gordian Knot explains why such legislation is bound to fail. The authors— Neuman is a communications professor at Tufts University; McKnight and Solomon are associate directors of the MIT Center for Technology, Policy, and Industrial Development—argue that American policy rests on outmoded principles inherited from the distant past. Requiring telecommunications companies to act as public trustees, for instance, may have been sensible in an era of legally sanctioned monopolies; in today’s increasingly competitive environment, it is not. But the authors argue with equal force that a pure laissez-faire approach, devoid of regulation, would invite anticompetitive practices reminiscent of those of the turn-of-the-century robber barons. Instead, they propose a third way: policymakers ought to adopt a set of well-defined objectives and then step aside, allowing private industry to decide how best to achieve them.

Without offering a fully realized alternative policy, the authors suggest four objectives that would produce a competitive, flexible, consumer-friendly system, one that they label the "open communications infrastructure." "Open architecture" would permit different companies and technologies to interconnect, as cellular and wired telephones now do (and as VHS and Beta videocassette players do not). "Open access" would eliminate that mainstay of traditional telecommunications regulation, the legally designated monopoly. "Universal access" would ensure that competition would not deprive remote communities of telecommunications services. Finally, "flexible access" would let consumers send and receive digital data in a variety of ways: "The telephone company can deliver multichannel television; the cable company can provide telephone service; and each of these formerly distinct services (along with other competitors) can provide electronic home shopping, electronic encyclopedias, magazines and newspapers— all delivered to high-speed home printers." With the old regulatory distinctions rapidly falling away, this cogent, clear-headed book invites a national debate on where we go from here.

—Janice Obuchowski