Telecom Act Is Overdue for Rewrite
Eighteen years ago, the Internet was a pretty different place. AltaVista had just launched in 1995 and was rapidly becoming the dominant search engine. The 56K modem was invented that year, but wouldn’t be commercially available until 1997. And Congress passed the 1996 Telecom Act, with the rare foresight to largely insulate the Internet from government interference. The result has been the remarkable engine of innovation, growth, and expression that most Americans now rely on every day.
Unfortunately the law, now 18 years old, is showing its age. There are no more telephone monopolies and no logical reason for very different regulatory treatment of broadband providers who are now direct competitors.
House Energy and Commerce Committee Chairman Fred Upton and Communications Subcommittee Chairman Greg Walden have already begun the process of rewriting the act in earnest, and there is cause for optimism that there can be bipartisan cooperation.
With the wide acclaim being heaped on former long-time Chairman John Dingell on the occasion of his retirement, it’s worth noting he has embraced the need for a rewrite, saying: “We should approach this in a balanced fashion in order to preserve and promote American leadership in the telecommunications industry.”
Phone service is increasingly just one application in a broadband world, and a low-bandwidth application at that. The modern communications marketplace is defined by facilities-based competition between cable companies that have dramatically upgraded the capabilities of their coaxial networks and built out fiber-optics and phone companies that have also made huge investments in new capabilities. Wireless and satellite have also become vigorous competitors. The services and choices exceed the dreams of all but the most visionary 1996 thinkers.
Wireless substitution is starting to make home phones an endangered species, with about 40 percent of household now having cut the cord. The speed and reliability of LTE makes wireless broadband a real competitor to residential broadband for many consumers who don’t stream a lot of online video. On the other hand, traditional cable players like Comcast are investing in a nationwide WiFi network, adding a new competitor to the core mobile broadband business of the wireless carriers.
All of the differently-regulated communications services are converging into a single broadband market, for which the law was not designed. Even worse, the recent D.C. Circuit decision in Verizon v. FCC, according to a well-reasoned dissent, granted “the FCC virtually unlimited power to regulate the Internet.”
So we find ourselves with a law written for a world that doesn’t exist, and an agency potentially with judicially-granted license to create for itself authority for the world that does – on top of all the ill-fitting rules that remain on the books. This unchecked, amorphous power means ricks policies that could swing wildly with presidential elections, undermining long-term investment and innovation.
Congress must therefore again comprehensively rewrite the telecom act, this time based on flexible principles that are technology neutral and will not therefore be outdated by the time the new bill reaches the president’s desk.
A more modern approach would allow wide-open facilities-based competition with regulators playing the more modest role of protecting consumers. Regulators should only be empowered to step in when there has been demonstrable harm to consumers or anticompetitive activity.
Of course, there is always the risk then when Congress reopens a law they find a way to make it even worse, which is why humility and flexibility is critical to the success of this process. Politicians don’t know any better than bureaucrats which technologies will emerge and ultimately be preferred by consumers. But for that very reason, the current act is unacceptable. A rewrite is needed to empower consumers and keep the remarkable Internet innovation engine humming.