Communications Act Rewrite Should Eliminate Regulatory ‘Silos,' Panelists Say

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By Paul Barbagallo  

As part of the next rewrite of the Communications Act, Congress should avoid “silos” that treat like companies and services differently, according to participants in a panel discussion Oct. 18 organized by the free-market think tank Free State Foundation.

Under the current Communications Act, which was last comprehensively updated in 1996, the Federal Communications Commission regulates telecommunications providers under Title II, wireless carriers under Title III, and cable operators under Title VI, even though the distinctions among these companies have blurred as telecom providers offer cable service, cable operators offer voice service, and wireless carriers offer both voice and data service.

“The problem is easy to define: We have an asymmetrical regulation situation,” said Adam Thierer, senior research fellow at the Mercatus Center's technology policy program at George Mason University, during the panel, “Ideas for Communications Law and Policy Reform in 2013.”

Thierer pointed to a massive project he spearheaded in early 2005 as president of the Progress and Freedom Foundation, which ultimately resulted in model legislation (S. 2113, the Digital Age Communications Act) which Sen. Jim DeMint (R-S.C.) introduced in the 109th Congress. The thrust of DACA was to limit the FCC's regulatory powers to curb unfair competition, a concept similar to antitrust enforcement.

One proposal in DACA, Thierer noted, incorporated the principle that if the FCC removes rate regulation from one industry, it must do so for all industries under its jurisdiction.

Regulation, he added, would also adhere to the principle of Moore's Law, the proposition in the technology world that the number of transistors on a semiconductor can be inexpensively doubled about every two years. For practical purposes, under DACA, FCC regulations would automatically sunset every two years.

Changing Role of Incumbent Phone Companies.

Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan research group, agreed that statutory reform is in order, noting that the Telecommunications Act of 1996 was largely predicated on encouraging competition in telecommunications markets.

The Telecommunications Act of 1996 had required that the five local Bell telephone companies--Ameritech, Bell Atlantic, BellSouth, SBC, and US West--first convince the FCC that their local phone networks are open to potential competitors before being allowed to offer long-distance service to customers in their regions.

In a new Communications Act, Atkinson said, Congress must focus on “what the world really is today”--a market with intermodal competition among companies with all-IP, or internet protocol, networks.

A new statute should not try to create more competitors in the market for competition sake, he said.

“More pipes fundamentally raise prices, which are passed on the consumer,” Atkinson said. “We need to have a policy that encourages consolidation among [incumbent phone companies], because scale matters.”

James Gattuso, senior research fellow in regulatory policy, the Heritage Foundation, shared that sentiment, arguing that “industry-specific, comprehensive regulation” no longer makes sense.

Commenting on what the FCC's role should be as part of a new statutory framework, Gattuso said the agency should be “drawing a line around its own duties” rather than “expanding its turf” to regulate new technologies and services.

Gattuso said the FCC should “rationalize” agency review of mergers and acquisitions to avoid duplicating the work of the Department of Justice; modernize ownership rules to allow newspapers and television broadcasters to merge; and focus on freeing spectrum for newer technologies.

David Honig, president and executive director of the Minority Media and Telecommunications Council, a civil rights organization, concurred with some of Guttuso's points, namely that merger reviews should be conducted by one agency “in one location, so it's quicker.”

He also said the FCC, absent a Communications Act rewrite, should continue to establish “shot clocks” for regulatory decisions and allow for more deregulation, where appropriate.

“Some rules should be let go,” Honig said.

FCC Commissioner: Break Down Current Structure.

In a question-and-answer session with Randolph May, president of the Free State Foundation, Republican FCC Commissioner Robert McDowell said the agency could be doing more to eliminate regulations that apply disparately to telecom providers, cable operators, and wireless carriers. The FCC, for example, could engage in more sua sponte deregulatory actions under the agency's forbearance authority.

He further pointed to Section 706 of the 1996 Act, which in his view has a “deregulatory bent.”

Section 706(a) states that the commission shall “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans … by utilizing, in a manner consistent with the public interest, convenience, and necessity, price-cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.”

Under Section 706(b), meanwhile, the FCC must “determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.” If the commission makes a negative finding, it shall take “immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications markets.”

“There's a lot that can be done [under 706],” McDowell said.

He added: “It no longer matters whether a service is provided over a twisted copper pair or a coaxial cable.”

Responding to a question about the need for a Communications Act rewrite, McDowell said Congress should “knock down” the current “silo” regulatory structure.

“That really is early 20th century thinking,” he said of the act's segregation of telecommunications, wireless and cable companies.

In a new statute, he said, the FCC's regulatory activity should be focused mainly on preventing abuses of market power and reducing consumer harm.

“It took about 10 years to pass the 1996 Telecommunications Act,” he noted. “I don't think we can take that long.”

That law, he pointed out, while a decade in the making, contained “something for everyone.”

Consumer groups, telecom and cable industries, and high-tech interests must convey the “seriousness” of moving legislation, he said. Because, ultimately, “you need to have members of Congress serious about moving legislation.”