communities and organizations, and not with the ordinary issues of communication policy as they appear in this bill.

I take that at least at the end of the afternoon perhaps-as some advantage, because it gives me some distance from the conventional terms in which we have spent most of the day, talking about insulated finances, appointments, the balance between some sort of central endowment or corporation, and the stations. Those are not terms in which I would like to cast my testimony.

I was, however, delighted, particularly by Dr. Fleming's testimony, because there are points at which what I would like to say converge upon observations that he made about the relationship between the bill and—if you like-emerging communication development.

Let me begin with a suggestion, which you may take as sort of blessed relief from the ordinary rhetoric to which you are subjected. It seems to me that one of the goals of national communication policy, and hence one of your goals, should be the reduction of appeals to the public interest, that is, as much as you can, you would like to get out of the business of people appealing to the public interest.

This suggestion is rooted in two observations: The first deals with both the social organization and the technology of the radio and television industry; the second with the conditions at executive communication.

Within that social structure, and within that technical network, as we all know, there are a great many consumer wants, even though backed by cash-that is, people who pay to watch certain things-that just cannot be met effectively. Because they can't be met, they are expressed in political rather than in market settings. In those settings, such as rooms like this, these demands-I want to watch ballet, or the contentious issue this morning I would like to learn how to disco-these demands must be represented as if they were peculiarly meritorious-you can't buy them in the market but they are really important-since it is merit wants which are legitimate objects of public expenditures.

Restructuring the industry and enhancing its technical capacities so that it is possible for these supposed merit wants to be met without direct governmental programing or governmental resources, would relieve us of the burden of redistributive decisions, of allocating money and of a peculiarly emotional line of talk when people say, Why meritorious? Meritorious use for whom? And you play the waltz around the issue of the public interest.

There is another way to reduce the need to appeal to the public interest. A public interest is one which cannot be ascribed to any particular group-or in the ordinary negative sort of language, what are called special interests. It is one of the characteristics of a high-capacity communication system and-if you like—of a wise or intelligent organization that they are usually able to solve the problem of ascription. They allow us that it is Joe and Harry and Mary who will be benefited rather than a vaguely defined public. One of the special virtues of markets is their ability to attribute benefits.

If you find a way to increase the information capacity of a communications system, one of the things that improvement often

does is to discern who is really benefited, who wants something and when you don't have to employ the idea of a public interest. Now, that may seem like a very abstract idea but let me illustrate its force: Yesterday, I got in the mail-as I guess did millions of Americans-not as many as should, perhaps the June issue of the "Selected U.S. Government Publications." That little handy, short catalog for the Government Printing Office. The Federal Government is, of course, the largest publisher in the United States; its messages as listed in the GPO catalog-if you want you can call them programs-are highly targeted to particular information users. If you want to help your car, here is a pamphlet; if you want to grow tomatoes, here is a pamphlet. These are frequently overtly politically intended. "Here is the Government position on such-and-such," signed, "Secretary of State." And they are often under-and I quote "the direction, supervision or control of Federal officials." That is your language in H.R. 3333.

These qualities of being targeted, overtly political, and under the control of somebody who is trying to do something about the message are complementary and are essential to the success of the publication effort.

The Government is a massive and effective producer of messages which serve the private wants of individuals. You can even, under new arrangements, pay for them with your Master Charge or VISA.

My recommendations, which are admittedly sketchy, have two parts, which may appear to be ideologically inconsistent but which fit within a reasonably coherent though somewhat hybrid view of the role of the Government.

First, I welcome your emphasis on the use of markets rather than regulation to adjust the behavior of communications systems. You have not, however, tried to structure those markets, adding elements with direct public investments, if necessary, in a way which would reduce the pressure to articulate wants as meritorious. Instead, the various provisions of titles IV and VI-whether you divide the endowment two-thirds or one-third in one pattern, or in another pattern-stay within the conventional regulatory framework. I don't think you need my help, really, in detailing the ways in which the market might be restructured so as to add channels, induce competition to limit monopoly power and allow for information users to pay directly for what they select.

I think it is clear to most people that the great distorting element in all communications policy is the combination of monopoly power and the public good quality of broadcast messages. Once they are out, anybody can get them and therefore flowing from that public good quality is the overtly free quality of television and radio, that is, free television. If you focus on that, free television drives out a great many things the people would like to do, and provides what you might think of as unfair competition.

If I had been alert when the hearings were announced, I probably would have preferred to have testified about the intraexchange telecommunication facilities, or what I would have called, in my old-fashioned way, cable television.

I am simply pointing now to the link between those facilities and the endowment and public broadcasting provisions.

Mr. Collins was perfectly correct. If you had a world in which people who wanted ballet or disco could pay for it; if you had a world in which you thought that it was important that people wanted it, you could transfer income to them and allow them to pay for it; if you had a world in which you could not have freeloaders-that is, people who watch public television and don't belong, or don't pay for what they get-then in that sort of world you would not need an endowment.

If you had a world where that was partially true, you would need less of an endowment.

The second point complements the first. While you have carefully developed the endowment, you have neglected the possibility of a Federal telecommunication service comparable to the Government Printing Office. The terms of debate have been so much about the issue of insulation from Government influence that you have neglected the possibilities for extending to television and radio the sort of information distribution services in which the Government is already deeply involved in printing.

If forced to choose between the endowment and such a service, I might select the former-that is to go with the insulated endowment-but they are not incompatible and you might explore their complementary roles.

Finished.

Mr. COLLINS [presiding]. Thank you.

We appreciate your coming down here. You are from the university, or from the Wharton School, or what?

Dr. MANDELBAUM. The Wharton School is part of the institution. I almost thought you were going to say, are you from the University of Pennsylvania or Penn State?

Mr. COLLINS. No, you know, I went to Harvard Business School, and we used to refer to our school as the business school, and Wharton sort of lives off in a cage by themselves, too.

What I wanted was your objective viewpoint on this.

Basically, to what extent do you believe that public broadcasting should be in the entertainment field, or has a responsibility to be in the entertainment field?

Dr. MANDELBAUM. You are throwing me back on what in some sense are the philosophic foundations that I laid out rather briefly. If I can respond to the line of questioning that I pursued before on the same issue—

Mr. COLLINS. That is right. I talked to them, but you can be more objective than they are.

Dr. MANDELBAUM. I don't know if there is any difference. Take everybody with a grain of salt, and do not assume I am objective. The attempt to define public television, let's stick with that, and commercial television does not necessarily depend on any distinction in the programing. Mr. Iselin this morning was very interesting in pointing out the real distinction was the interruption and not the character of the program. One of the major dimensions that is often ignored is that issue of interruption. We have become so accustomed to interruption that we think of it as trivial, though it affects our whole response to the medium.

If I would like to watch the same thing without interruption, one issue would be, shouldn't I have the ability to pay for an uninterrupted program?

Mr. COLLINS. As you saw, they didn't get too enthusiastic about that alternative. What do you think about paid television?

Dr. MANDELBAUM. I think that alternative is one that is very promising.

Mr. COLLINS. For public broadcasting?

Dr. MANDELBAUM. No, for the whole caboodle.

Mr. COLLINS. For the entire sector?

Dr. MANDELBAUM. That is what I said, perhaps more forcefully than would emerge if you started to detail the meaning exactly. My argument is that the great enemy of community organizations, of family dinners, of reading-you can make a long list-is the overtly free character of television. It distorts resource allocation terribly, in my mind, and if television were not free, I think our world would look very different. The incentives to target programs for people who want to use the information would be much greater, and you would indeed fully capture there the qualities of the market which you are after.

And as I suggested, it seems to me that in this bill what you have done is to pull down on your head the flak that comes from talking about deregulation, and you have not really grasped the benefits from a set of policies which would enormously expand the number of channels, which would price the commodity in a different way and provide incentives for speaking powerfully with people.

Mr. COLLINS. I yield to our counsel here.

Ms. SACHS. Well, do you have any specific recommendations as to how we can move toward that kind of environment?

Also, in an environment where the consumer could pay for programing, would there be a need for a continued Government subsidy of kinds of programs and services that the marketplace might not provide?

Dr. MANDELBAUM. The answer to the second question is, "Yes." Indeed the paradox in my statement is, if you really grasp the market solution strongly, it requires now very strong governmental action to create a competitive market in telecommunications. So that, rather than strong intervention and freeing the market being polar opposites, they are, at least at this moment in time, strongly complementary.

As to the first question, the themes that I picked up during the course of the day, which could emerge philosophically reagonizing over issues, deal with the provision of facilities. The current bill deals only with programs.

Consider a question: Suppose a public station wanted to build a cable network, or to cooperate in the building of a cable network, might the endowment help to fund such provision?

If you are to grasp the role of new communications technologies, I think the answer should be "Yes", and that provision should be altered.

Ms. SACHS. Excuse me. Don't you think that the marketplace is going to provide the technology, the highway into the home, as it were?

Dr. MANDELBAUM. No more than I would think the market is likely to build streets; that is, as you know, I will tend to compare a cable channel with a street. There are organizational costs in arranging to build streets which lead publics to build them oftenin large cities. In the past, and in small cities commonly todaystreets are a joint public/private enterprise. They are built by special assessments plus the public treasury.

That is the model that I have for a whole range of telecommunications facilities from cable to satellites, and it is clear that we are, in fact, in that realm.

In Philadelphia, the largest cable system is an LEAA-funded police system, rather than the one fragmentary public system. Ms. SACHS. You propose, then, that this endowment, which is primarily funding programs and services, should also have a role in funding the technology that is going to deliver those services? Would that be placing too much power in one organization?

Dr. MANDELBAUM. No.

Ms. SACHS. Why not?

Dr. MANDELBAUM. The second observation: If you ask me about particular provisions, if you go back to the intraexchange-I have forgotten the term-if you go back to the cable television provisions in the bill, if you imagine a possibility that a city and a cable operator, or a consortium of cable operators, built a system together and bargained about the design of that system in a way which would change the whole context in which messages were distributed, it seems strange to preclude that city from, in effect, regulating the cable system.

Ms. SACHS. But we weren't talking about that; we were talking about the endowment.

Dr. MANDELBAUM. Right, and you asked me about provisions. Ms. SACHS. Right.

Dr. MANDELBAUM. And I said if you wanted to take what I said and bring it down from general perspective to the sort of clauses that you might amend as you are marking up items in the last run to the finish line, one of the provisions deals with facilities in relation to the endowment or at least a very clear relationship to other funds dealing with facilities, and a coordinate role on the facilities issue. The corporation people picked that up as well.

And the second is thinking about interventions, both on the satellite and I particularly focused on the cable side-which would indeed allow regulation-that you are thinking of regulation in order to free the market.

What about if there are developmental activities, where regulation is, in fact, part of bargaining? One of the bad ideas that came out of the morning was the idea of taxing cable systems in order to pay for public broadcasting.

It is not clear why the subscribers to a cable system should be peculiarly taxed to support public broadcasting.

Ms. SACHS. Thank you very much.

Mr. COLLINS. That will conclude it. Thank you very much for coming and being here today.

[Whereupon, at 5 p.m., the hearing was adjourned subject to the call of the Chair.]

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