New Communications Act Should Avoid ‘Public Utility Regulatory Model,’ Mayo Says

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As part of the next rewrite of the Communications Act, Congress should refrain from imposing a “public utility regulatory model” on market players, said John Mayo, professor of economics, business, and public policy in Georgetown University's McDonough School of Business, at a Capitol Hill briefing Oct. 9.

Mayo's remarks come as pressure is mounting on top legislators to begin a process to modernize laws that were last overhauled 15 years ago but scarcely mention the internet.

“Neither the Telecommunications Act 1996 or the Communications Act of 1934, as amended by the ’96 act, as well as they may have served the American people, anticipated the explosion of wireless telephony and broadband,” Mayo said.

Both statutes, he noted, were premised on protecting consumers from a natural monopoly in local phone service.

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

Convergence of Wired, Wireless.

As Mayo sees it, there is now competition for traditional landline phone services--both local and long-distance--as well as for wireless phone services, yet the laws still treats each service and the provider of that service differently.

“Policy in telecommunications should reflect the convergence of wired and wireless, and the dramatic emergence of 'anywhere anytime’ voice, data, and video communications through IP [internet protocol] technology,” Mayo said.

Mayo is a former chief economist to the Senate Small Business Committee and has advised and consulted for many public and private agencies including the Justice Department, the Federal Trade Commission, and AT&T.

According to industry statistics, by the end of 2011, more than 85 percent of U.S. households subscribed to a wireless phone service, with slightly more than 33 percent subscribing to wireless only.

“Right now, consumers are telling us in absolutely unequivocal terms: 'We don't think wireline is a service that is separate in our minds from wireless.' There is a tremendous substitutability across those spaces,” Mayo said. “This is an important question for policymakers: Do we still need a regulatory policy for these separate worlds?”