In December, Reps. Upton and Walden announced that they intend to update the Communications Act, which saw its last major revision in 1996. Today marks the deadline to submit initial comments regarding updating the Act. Below is my submission, which includes reference to a Mercatus paper by Raymond Gifford analyzing the Digital Age Communications (DACA) reports. These bipartisan reports would largely replace and reform our deficient communications laws.
Dear Chairman Upton,
As you and Rep. Walden recently acknowledged, U.S. communications law needs updating to remove accumulated regulatory excess and to strengthen market forces. When the 1934 Communications Act was passed, there was a national monopoly telephone provider and Congress’s understanding of radio spectrum physics was rudimentary. Chief among the Communication Act’s many flaws was giving the Federal Communication Commission authority to regulate wired and wireless communications according to “public interest, convenience, and necessity,” an amorphous standard that has been frequently abused. If delegating this expansive grant of discretion to the FCC was ever sensible, it clearly no longer is. Today, eight decades later, with competition between video, telephone, and Internet providers taking place over wired and wireless networks, the public interest standard simply invites costly rent-seeking and stifles technologies and business opportunities.
Like an old cottage receiving several massive additions spanning decades by different clumsy architects, communications law is a disorganized and dilapidated structure that should be razed and reconstituted. As new technologies emerged since the 1930s—broadcast television, cable, satellite, mobile phones, the Internet—and upended existing regulated businesses, the FCC and Congress layered on new rules attempting to mitigate the distortions.
Congressional attempts at reforming communications laws have appeared regularly ever since the 1996 amendments. During the last such attempt, in 2011, the Mercatus Center released a study discussing and summarizing a model for communications law reform known as the Digital Age Communications Act (DACA). That model legislation—consisting of five reports released in 2005 and 2006—came from the bipartisan DACA Working Group. The reports addressed five areas:
1. Regulatory framework;
2. Universal service;
3. Spectrum reform;
4. Federal-state jurisdiction; and
5. Institutional reform.
The DACA reports represent a flexible, market-oriented agenda from dozens of experts that, if implemented, would spur innovation, encourage competition, and benefit consumers. The regulatory framework report is the centerpiece recommendation and adopts a proposal largely based on the Federal Trade Commission Act, which provides a reformed FCC with nearly a century of common law for guidance. Significantly, the reports replace the FCC’s misused “public interest” standard with the general “unfair competition standard” from the FTC Act.
Despite the passage of time, those reports have held up remarkably well. The 2011 Mercatus paper describing the DACA reports is attached for submission in the record. The scholars at Mercatus are happy to discuss this paper and the cited materials below—including the DACA reports—further with Energy & Commerce Committee staff as they draft white papers and reform proposals.
Thank you for initiating discussion about updating the Communications Act. Reform can give America’s innovative technology and telecommunications sector a predictable and technology-neutral legal framework. When Congress replaces command-and-control rules with market forces, consumers will be the primary beneficiaries.
Sincerely,
Brent Skorup
Research Fellow, Technology Policy Program
Mercatus Center at George Mason University
Resources
Digital Age Communications Act (DACA) Working Groups Reports.
JEFFREY A. EISENACH ET AL., THE TELECOM REVOLUTION: AN AMERICAN OPPORTUNITY (1995).
Raymond L. Gifford, The Continuing Case for Serious Communications Law Reform, Mercatus Center Working Paper No. 11-44 (2011).
PETER HUBER, LAW AND DISORDER IN CYBERSPACE: ABOLISH THE FCC AND LET COMMON LAW RULE THE TELECOSM (1997).
There is bipartisan agreement that the 1996 Telecom Act was antiquated only shortly after President Clinton’s signature had dried on the legislation. There is also consensus that spectrum policy, still largely grounded in the 1934 communications statute, absolutely distorts today’s wireless markets. And there is frequent criticism from thought leaders, right and left, that the FCC has been, for decades, too accommodating to the firms it regulates and too beholden to the status quo (economist Thomas Hazlett quips the agency’s initials stand for “Forever Captured by Corporations”).
For these reasons, members of Congress every few years announce their intention to reform the 1934 and 1996 communications laws and modernize the FCC. Yesterday, some powerful House members unexpectedly reignited hopes that Congress would overhaul our telecom, broadband, and video laws. In a Google Hangout (!), Reps. Fred Upton and Greg Walden said they wanted to take on the ambitious task of passing a new law in 2015.
Much depends on next year’s elections and the composition of Congress, but hopefully the announcement spurs a major re-write that eliminates regulatory distortions in communications, much as airlines and transportation were deregulated in the 1970s–an effort led by reformist Democrats.
About ten years ago, more than fifty scholars and technologists crafted reports which constituted the Digital Age Communications Act (or DACA) that is largely deregulatory (a majority of the group had served in Democratic administrations, interestingly enough). In 2005, then-Sen. Jim DeMint proposed a bill similar to the working group’s proposals. The working group’s recommendations aged very well in eight years–which you can’t say about the 1996 Act–and represents a great starting point for future legislation.
As Adam has said the DACA reports have five primary reform objectives:
– Replacing the amorphous “public interest” standard with a consumer welfare standard, which is more well-established in field of antitrust law
– Eliminate regulatory silos and level the playing field through deregulation
– Comprehensively reform spectrum not just through more auctioning but through clear property rights
– Reform universal service by either voucherizing it or devolving it to the States and let them run their own telecom welfare programs; and
– Significantly reforming & downsizing the scope of the FCC’s power of the modern information economy
DACA redefines the FCC as a specialized competition agency for the communications sector. The FCC largely sees itself as a competition agency today but the current statutes don’t represent that gradual change in purpose. The FCC is slow, arbitrary, Balkanizes industries artificially, and attempts to regulate in areas it isn’t equipped to regulate–the agency has a notoriously bad record in federal courts. These characteristics create a poor environment for substantial investments in technology and communications infrastructure. The DACA proposals aren’t perfect but it is a resilient framework that minimizes the effect of special interests in communications and encourages investments that improve consumers’ lives.
Yesterday it was my privilege to speak at a Free State Foundation (FSF) event on “Ideas for Communications Law and Policy Reform in 2013.” It was moderated by my friend and former colleague Randy May, who is president of FSF, and the event featured opening remarks from the always-excellent FCC Commissioner Robert McDowell.
During the panel discussing that followed, I offered my thoughts about the problem America continues to face in cleaning up communications and media law and proposed a few ideas to get reform done right once and for all. I don’t have time to formally write-up my remarks, but I thought I would just post the speech notes that I used yesterday and include links to the relevant supporting materials. (I’ve been using a canned version of this same speech at countless events over the past 15 years. Hopefully lawmakers will take up some of these reforms some time soon so I’m not using this same set of remarks in 2027!)
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It was my pleasure this week to host a terrific panel discussion about the future of broadband policy and FCC reform featuring Raymond Gifford, a Partner at the law firm of Wilkinson Barker Knauer, LLP, Jeffrey Eisenach, a Managing Director and Principal at Navigant Economics and an Adjunct Professor at George Mason University Law School, and Howard Shelanski, Professor of Law at Georgetown Law School who previously served as Chief Economist for the Federal Communications Commission and as a Senior Economist for the President’s Council of Economic Advisers at the White House. We discussed two new papers by Gifford and Eisenach on these issues.
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PFF has just published the transcript for an event we hosted last month asking “What Should the Next Communications Act Look Like?” The event featured (in order of appearance) Link Hoewing of Verizon, Walter McCormick of US Telecom, Peter Pitsch of Intel, Barbara Esbin, Ray Gifford of Wilkinson, Barker, Knauer, and Michael Calabrese of the New America Foundation. It was a terrific discussion and it couldn’t have been more timely in light of recent regulatory developments at the FCC. The folks at NextGenWeb were kind enough to make a video of the event and post it online along with a writeup, so I’ve included that video along with the event transcript down below the fold. Continue reading →
I was very pleased to hear this announcement today from leading Senate and House Democrats regarding a much-needed update of our nation’s communications laws:
Today, Senator John D. (Jay) Rockefeller IV, Chairman of the U.S. Senate Commerce, Science, and Transportation Committee, Rep. Henry A. Waxman, the Chairman of the House Committee on Energy and Commerce, Senator John F. Kerry, the Chairman of the Senate Subcommittee on Communications, Technology, and the Internet, and Rep. Rick Boucher, the Chairman of the House Subcommittee on Communications, Technology, and the Internet announced they will start a process to develop proposals to update the Communications Act. As the first step, they will invite stakeholders to participate in a series of bipartisan, issue-focused meetings beginning in June. A list of topics for discussion and details about this process will be forthcoming.
This is great news, and an implicit acknowledgment by top Democratic leaders that the FCC most certainly does not have the authority to move forward unilaterally with regulatory proposals such as Net neutrality mandates or Title II reclassification efforts.
I very much look forward to engaging with House and Senate staff on these issues since this is something I’ve spent a great deal of time thinking about over the past 15 years. Most recently, Mike Wendy and I released a paper entitled, “The Constructive Alternative to Net Neutrality Regulation and Title II Reclassification Wars,” in which we outline some of the possible reform options out there. We built upon PFF’s “Digital Age Communications Act Project,” (DACA) which was introduced in February of 2005 with the ultimate aim of crafting policy that is adaptive to the frequently changing communications landscape. You can find all the white papers from the 5 major working groups here. I also encourage those interested in this issue to take a look at the video from this event we hosted earlier this month asking, “What Should the Next Communications Act Look Like?” Lots of good ideas came up there.
Anyway, down below I have included the video from that event as well as a better description of the DACA model for those interested in details about how that model of Communications Act reform would work. I think DACA holds great promise going forward since it represents a moderate, non-partisan approach to reforming communications policy for the better. I pulled this summary from the paper that Mike Wendy and I recently penned: Continue reading →
Noting that the Telecom Act has become ” irrelevant to the ecosystem that has developed,” Verizon’s Executive Vice President Tom Tauke today called for Congress to overhaul the nation’s archaic communications laws and the regulatory regime that the Federal Communications Commission (FCC) is currently attempting to pigeonhole the Internet and entire Digital Economy into. It’s an excellent speech, and I encourage you to read the entire thing (which I have embedded down below the fold in a Scribd reader).
“[T]he test for government intervention in the marketplace is to prevent either harm to users or anti-competitive activity,” he said. He rightly noted that, in an age of technological convergence and vigorous cross-platform competition, the old silo-based approach of the Telecom Act — with its various Titles for outmoded market definitions — no longer makes any sense. He noted:
by the very nature of the Internet Ecosystem, many are working together or competing in other company’s turf. Computer companies sell phones, and quite successfully. Search engines sell open operating systems. Network providers create their own apps stores. That means that the value proposition to the consumer is really a package created by many companies acting together with little, if any, regard to their previous corporate histories. So no set of companies should be immune from scrutiny.
Of course, a regulatory regime already exists that accomplishes this goal: antitrust law. But Tauke’s proposal isn’t quite that sweeping. He doesn’t call for the FCC to be dynamited the ground and to just shift everything into the antitrust bucket, which some of us would prefer. Instead, he speaks generically about the need for a more sensible process — most likely still enforced by the FCC — that would work as follows:
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PFF has just released the transcript of an excellent panel discussion I moderated last week entitled, “Let’s Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum.” As I’ve mentioned here before, one of the hottest issues in DC right now is the question of broadcast TV spectrum reallocation. Blair Levin, who serves as the Executive Director of the Omnibus Broadband Initiative at the Federal Communications Commission, recently raised the possibility of reallocating a portion of broadcast television spectrum for alternative purposes, namely, mobile broadband. Such a “cash-for-spectrum” swap would give mobile broadband providers to spectrum they need to roll out next generation wireless broadband networks while making sure broadcaster receive compensation for any spectrum they hand over. The FCC just recently released a public notice on “Data Sought on Users of Spectrum,” (NBP Public Notice # 26) that looks into the matter. “This inquiry,” the agency says,” takes into account the value that the United States puts on free, over-the-air television, while also exploring market-based mechanisms for television broadcasters to contribute to the broadband effort any spectrum in excess of that which they need to meet their public interest obligations and remain financially viable.” Meanwhile, the House Energy and Commerce Communications Subcommittee is set to hold a hearing on the issue next Tuesday.
PFF’s panel discussion on this issue featured an all-star cast of characters, including opening remarks by Blair Levin, and a terrific discussion ensued. [You can hear the full audio from the event here.] Down below I have highlighted some of the major points each speaker made during the discussion and also embedded the complete transcript in a Scribd reader. Also, just a reminder that my PFF colleague Barbara Esbin and I authored a short paper on this issue recently: “An Offer They Can’t Refuse: Spectrum Reallocation That Can Benefit Consumers, Broadcasters & the Mobile Broadband Sector.”
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Along with my colleague Barbara Esbin, the Director of PFF’s Center for Communications and Competition Policy, I have just released a new paper on discussing the possibility of reallocating a portion of broadcast television spectrum for alternative purposes, namely, mobile broadband. As I discussed here before, Blair Levin, the Executive Director of the FCC’s Omnibus Broadband Initiative, has been suggesting that it might be possible to craft a grand bargain whereby broadcasters get cash for some (or all) of their current spectrum allocations if they return spectrum to the FCC for reallocation and re-auction, likely to mobile broadband services.
In our paper, “An Offer They Can’t Refuse: Spectrum Reallocation That Can Benefit Consumers, Broadcasters & the Mobile Broadband Sector,” [PDF] Barbara and I argue that:
the benefits of such a deal could be enormous for wireless broadband providers, developers of digital technologies, and consumers. Expanding the pool of spectrum available for next-generation wireless broadband offerings will ensure that innovative new networks, devices, and services are made available to the public on a timely basis. Ultimately, that will mean more high-speed choices for consumers, especially those in rural areas harder to reach with high-speed wireline networks. Finally, more generally, anything that moves us in the direction of a freer market in spectrum is a good thing.
But fairness to broadcasters lies at the heart of this spectrum reallocation plan. If a deal can’t be structured that broadcasters would find acceptable, they should not be forced to come to the table. When we speak of an offer they can’t refuse, we mean one so attractive that no rational businessperson or investor would pass it up. It is essential broadcasters be willing partners in the deal, and be full participants in the process of shaping its contours.
Read the entire thing here, or below the fold as a Scribd document. Continue reading →
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