Realizing the digital future means letting go of the past

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Article Highlights

  • Apparently some members of Congress think about more than reelection.

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  • We live an age of convergence, where information, communication and technology have merged. Service providers no longer fit the silos.

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  • It is difficult to find the evidence that regulation created the innovations we enjoy today.

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  • Regulators are often the last to know, much less create, what is happening in the world of innovation

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Apparently some members of Congress think about more than re-election.

Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, and Greg Walden, R-Ore., chairman of the Communications and Technology Subcommittee, have launched a multi-year effort to reform the Communications Act of 1934. Already their effort has been lauded by Tom Wheeler, chairman of the Federal Communications Commission (FCC), who deemed the effort warranted and necessary.

Signed into law by Franklin Roosevelt, the Act established the FCC and a silo framework to govern communications by radio, television and telephone. Cable was added in 1984. Congress last updated it in 1996.

It borders on the trite to say it, but we live an age of convergence, where information, communication, and technology have merged. Service providers no longer fit the silos. Telephone and cable companies provide information and communication services, two increasingly obsolete categories in the Communications Act. In addition, new players such as Google, Facebook, and WhatsApp also provide information and communications services, but are not governed by the Communication Act. Standardized definitions applied fairly are needed to make a level playing field for competition.

To a large degree, innovation in broadband networks have enabled an improvement and diversification of services. As consumers we have come to expect the ability to access digital services anywhere and anytime on secure networks at a good price. And we have come to this point not because of regulation but in spite of it.

It is difficult to find the evidence that regulation created the innovations we enjoy today. Who knew that coaxial cables laid in 1948 could become a foundation for cable broadband? Or that copper wires could be recalibrated to conduct data at speeds of 100 megabits per second? Is the fact that the U.S. has the highest concentration of Long Term Evolution (LTE) devices and networks the result of enlightened regulatory policy, or an accident of history wherein the U.S. happens to be a large single market providing mobile providers with great scale? Indeed, regulators are often the last to know, much less create, what is happening in the world of innovation.

Though there is broad recognition that the Act needs to be updated — evident in the 116 respondents to the initial request for input on the rewrite — there is some concern that common carriage provisions need to be maintained, if not strengthened, to serve the public interest. Yet common carriage, a concept from transportation, has largely been disbanded in the transportation industries that have been deregulated.

Telecom regulation experts suggest that competition can ensure the desired outcomes. The 10th Anniversary Edition of the Telecom Regulations Handbook from 2011 observes: “Regulation has potentially high costs. The regulatory process is inherently time consuming to administer and requires considerable expenditure of resources. In addition, regulation can have unintended consequences which may be detrimental to customers and the ‘public interest’. No matter how capable and well-intentioned regulators are, they will never be able to produce outcomes as efficient as a well-functioning market.”

Competition experts have long maintained that if antitrust law is applied correctly, there is no need for industrial regulation and subsequent tax burdens. In the Netherlands and Denmark, government sees the key to consumer protection through increased competition and, if necessary, a consumer authority that has the power to prosecute when there is evidence of abuse of market position and consumer harm. A modern Communications Act should implement a similar standard where regulatory actions are taken and only in cases of demonstrable harm to consumers or competition.

Republicans and Democrats have identified a problem and have come together to begin the process to modernize and reform the Act. As Chairman Wheeler said, “All of us have observed the growing convergence of previously separate and distinct communications services and with it, inevitably, the growing obsolescence of the Communications Act’s categories.” The last bipartisan effort on communications was in 1996 when telephone companies were released from some of their Title II obligations of the Communications Act. The result was a flourishing of activity to provide internet services. That the parties should come together again should only be encouraged, and shows that the best way for Washington to support the future is to remove the barriers that keep us stuck in the past.

Roslyn Layton is a doctorate fellow in the Center for Communication, Media and Information Studies at Aalborg University in Copenhagen, Denmark. She is also a vice-president of Strand Consult, an independent consultancy for mobile operators, and a visiting fellow at the Center for Communications, Information and Technology at the American Enterprise Institute.

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