The iPhone, AT&T and the role of government

A recent TechCrunch article effectively outlines where private industry and government collide as they describe the situation behind Apple (and/or ATT's) rejection of an iPhone application written by Google that would circumvent the wireless voice network that AT&T provides iPhone users. Of course, this application still relies on AT&T's wireless data network (when WiFi is not available), but it really does serve as a disruptive technology as it replaces AT&T's phone number and voice telecommunications infrastructure. Think of this Google app as a kind of Skype of mobile phones.

This situation belongs on Between the Columns because of the role that government is playing in this situation. Here we have multiple companies developing and innovating around technologies using their own investment dollars, navigating a tricky landscape of competition and cooperation in order to profit and serve their customers' needs. As they make decisions that are best for them to protect their investments and strategies, the government jumps in, feeling the need to protect consumers from large companies who can use their dominant positions to limit consumer choice and hinder innovation.

It's fairly easy to presume that liberals and progressives would support this type of action. After all, the progressive mantra is to create equality and fairness wherever there is a systemic imbalance. My question is: where does this role fit into the conservative philosophical framework? Presumably, this is government interfering with the free market, which would be bad. But if the government does not intercede, then one big company -- Google -- will be limited in its ability to grow and prosper in the mobile internet market. Is that fair? Was it right/fair for the government to break up AT&T in 1982? Did that unleash new industries, competition and fairness in the marketplace? Or was it wrong for government to get involved in a successful, dominant company that had earned its dominance by being first-to-market? Should AT&T in 1982 simply have been better regulated? When is regulation not enough to solve a problem?

This actually introduces some interesting questions as we consider the current health care reform debate. For instance, a conservative commenter here at Between the Columns asks why health care reform simply can't be a regulation activity vs. the larger, systemic change Democrats are pushing for with a "public plan."