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Costs of politics, breaking the Rai-Mediaset duopoly and liberalizing TV frequencies

by Filippo Cavazzuti* – The licenses assigned below cost and administratively to Rai and Mediaset, the Rai license fee and the advertising benefits granted to Publitalia distort the market and take the form of real political costs – It's time to liberalize TV frequencies by assigning them competitive auction and allocating the proceeds to the public coffers

Costs of politics, breaking the Rai-Mediaset duopoly and liberalizing TV frequencies

What if we also counted the cost to the community deriving from the iron duopoly between Rai and Mediaset among the costs of politics?
It is said in the USA that the start of the personal fortune of Lyndon B. Johnson (36th US President who succeeded JF Kennedy) is due to the obtaining, by administrative means, of some licenses for the use of radio frequencies. This was in 1940 when LBJ himself was a member of the American congress.
It is also said that, again in the USA, the memory of what President LB Johnson achieved meant that starting from the eighties people began to hypothesize about assigning radio and television frequencies no longer through an administrative process, but through a competitive auction not only to subtract this assignment from the administrative political circuit, but also to avoid the risk of a potential conflict of "political management" arising in the assignment of the licenses themselves.
In line with this debate, since 1994 – that is, from the time of the first term of the Clinton administration – the Federal Communications Commission (FCC), established in 1934 by incorporation of another authority which at the time assigned licenses, began to assign the licenses themselves through a complex competitive auction managed electronically and with technical methods such as to guarantee the pluralism of operators in the reference sectors; thereby also benefiting the US Treasury which, according to some estimates, collected around 14 billion dollars.
It is well known that in Italy things are different: licenses are assigned administratively; the Rai fee - once explained as necessary to allow the public service - today in the face of the evident dissolution of any content that accredits the public service and substantially similar content on the Rai and Mediaset networks, effectively limits the use of advertising on the networks national networks to allow greater publicity for the Mediaset networks (and Publitalia in particular). Can the political agreement in favor of the Rai Mediaset duopoly bring the Rai license fee back as a political cost to maintain both Rai and Mediaset? Can the fact that Rai and Mediaset pay non-market fees for the administrative concession also be considered a cost of politics? Hasn't the original idea that within the perimeter given by the frequencies assigned exclusively to Rai and Mediaset failed miserably, maintaining a monopoly that does not increase new entries and new jobs and does not allow anyone else to participate in the advertising banquet?
There is a lot of talk about measures to relaunch the economy, why not start imitating the USA with the complete liberalization of the frequencies to be assigned (none excluded) through competitive auctions by subtracting this assignment from the political-administrative circuit? Circuit guaranteed by the fact that the heads of the Communications Agency, elected by the parliament, are nothing more than the long arm of the political system? The costs of politics would be reduced and a new incentive would be given to economic growth.
In summary, instead of proposing competition within the block that includes Rai and Mediaset, the regulatory state should bring competition outside this perimeter, allowing other new entries to participate in the great advertising banquet, to create new businesses and to hire young talents.
The proceeds from the auctions would contribute to the rebalancing of public finances, but perhaps the regulatory state is captive of the interests of the television duopoly with the consequent effects of increasing the costs of politics.
* Economist and former Consob commissioner

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