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A fresh look at communications regulation

Richard Adler | Dec. 10, 2014
Any new regulatory regime must recognise today’s realities while accommodating the changes we can’t foresee now.

New approaches for a new environment
As technology has evolved, the communications industry has been greatly transformed. Traditional landline service providers, the cable industry, fiber-optic service providers, satellite networks, Voice over Internet Protocol (VoIP) companies, wireless carriers and even software-based services (think of Skype or WhatsApp) all compete in a complex ecosystem of choices. And as technology continues to progress, new kinds of services and new options will continue to emerge. So the challenge facing policymakers is to devise a new regulatory structure that will protect consumers while encouraging vigorous competition and supporting ongoing innovation and that will remain relevant over time.

Attempts to broadly rethink how telecommunications regulation is structured are not new. And it turns out that some of the old ideas may still be worth considering today. For example, in 1986, Henry Geller, who had been the general counsel of the FCC, described the federal policymaking process for communications as "seriously flawed" and proposed the creation of a new federal agency that would combine the roles of the FCC and the National Telecommunications and Information Agency (NTIA). In 1998, Harry "Chip" Shooshan, who had served as chief counsel to the House Subcommittee on Communications, published a "modest proposal" that called for replacing the five FCC commissioners with a single professional administrator.

More recent proposals for telecom reform have focused on creating a new regulatory structure that would respond to the new digital environment while preserving the dynamism and innovativeness that have been the hallmarks of the lightly regulated Internet to date. For example, there is a growing consensus that the separate siloes that provide different regulatory rules for different media (administered by different "bureaus" within the FCC) no longer make sense and should give way to an approach more suitable to regulation of an overarching digital network that protects consumers and competition but is flexible enough to evolve with new technologies and encourage continued innovation.

Coping with constant change: New models for regulation
In addition to the challenge of designing a telecom regulatory scheme that is appropriate to a converged world, a second big challenge for policymakers is dealing with the relentless rate of change that characterizes digital media. Because government policies, once put in place, are typically difficult to modify, any fixed regulatory scheme that makes sense today is likely to make less sense tomorrow.

To address this problem, Professor Eli Noam of Columbia University has proposed what he calls "Regulation 3.0 for Telecom 3.0." According to Noam, Regulation 1.0 was the original 1934 Communications Act, which was based around regulating monopoly providers, while the '96 Act, which was intended to encourage competition, represented the 2.0 version. What is needed now, he argues, is a third version of regulation for a dynamic, digital environment that replaces the development of elaborate ex ante rules that define what is and is not permitted with a "more flexible, common-law style system based on broad principles."


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