Why Amer­ica needs an up­dated Com­mu­ni­ca­tions Act

Cur­rent law was writ­ten be­fore the broadband dig­i­tal age

The Washington Times Daily - - OPINION - By Ran­dolph May and Seth Cooper Ran­dolph May is pres­i­dent of the Free State Foun­da­tion, where Seth Cooper is a se­nior fel­low. They are co-au­thors of “Com­mAc­tUp­date#: A Com­mu­ni­ca­tions Law Fit for the Dig­i­tal Age” (Free State Foun­da­tion, 2017).

Congress needs to up­date the Com­mu­ni­ca­tions Act of 1934. In 2014, Repub­li­can Reps. Fred Up­ton and Greg Walden started a con­gres­sional re­view process, us­ing the #Com­mAc­tUp­date han­dle. Now al­most four years later, it’s time for Congress to get the job done by over­haul­ing the statute in a way that con­strains the Fed­eral Com­mu­ni­ca­tions Com­mis­sion’s (FCC) au­thor­ity to sub­sti­tute bur­den­some bu­reau­cratic man­dates for mar­ket­place free­dom.

It’s been more than 20 years since Congress made any sig­nif­i­cant changes to the law. In 1996, the com­mer­cial In­ter­net was still in its in­fancy — re­mem­ber how we mar­veled then at the World Wide Web — so it is not sur­pris­ing that the word “In­ter­net” ap­pears only a few times in the Com­mu­ni­ca­tions Act.

The cur­rent law was writ­ten in an age dom­i­nated by nar­row­band ana­log com­mu­ni­ca­tions. Now we live in an era of broadband dig­i­tal com­mu­ni­ca­tions. Sim­ply put, in the past two decades, the com­mu­ni­ca­tions mar­ket­place has un­der­gone dra­matic changes char­ac­ter­ized by in­creased competition and con­sumer choice. Ad­vanced dig­i­tal tech­nolo­gies are ren­der­ing ob­so­lete the legacy ser­vice distinc­tions — tele­phone, ca­ble, satel­lite, broad­cast­ing and so forth — still found in the cur­rent law.

Con­sumers are able to ac­cess com­pa­ra­ble prod­ucts and ser­vices through dif­fer­ent dig­i­tal com­mu­ni­ca­tions plat­forms, whether wire­less, fiber, ca­ble, satel­lite or com­bi­na­tions of th­ese. In­deed, the in­creased competition and con­sumer choice brought about by gi­ga­bit broadband net­works, next-gen­er­a­tion 5G wire­less tech­nolo­gies, mul­ti­fac­eted In­ter­net­con­nected smart de­vices, pro­lif­er­at­ing dig­i­tal me­dia ser­vices, and cut­ting-edge soft­ware ap­pli­ca­tions are only be­gin­ning to be re­al­ized.

But con­tin­ued progress is at risk. The cur­rent law, with its an­tecedents dat­ing back to the In­ter­state Com­merce Act of 1887 and reg­u­la­tion of rail­roads, and “more re­cently” to the Com­mu­ni­ca­tions Act of 1934 and reg­u­la­tion of mo­nop­o­lis­tic Ma Bell, grants the FCC too much un­bri­dled reg­u­la­tory dis­cre­tion. A regime char­ac­ter­ized by ubiq­ui­tous bu­reau­cratic dik­tats ar­guably may have made sense in an era of mo­nop­oly, but no longer.

Wit­ness two of the most no­to­ri­ous ac­tions of the Obama ad­min­is­tra­tion’s FCC. First, the agency pro­posed to re­quire that TV set-top boxes be stan­dard­ized ac­cord­ing to gov­ern­ment-de­signed “equal ac­cess” spec­i­fi­ca­tions on the the­ory this would ben­e­fit set-top box providers un­af­fil­i­ated with ca­ble and satel­lite pay TV ser­vices. Amaz­ingly, this stul­ti­fy­ing new man­date was pro­posed at the very same time that con­sumers are en­joy­ing an ever-in­creas­ing abun­dance of video pro­gram­ming ac­ces­si­ble through a pro­lif­er­at­ing ar­ray of video ser­vices, de­vices and apps. Ajit Pai, the Trump ad­min­is­tra­tion’s new FCC chair­man, has put the brakes on this back­ward-look­ing pro­posal.

And the FCC is now con­sid­er­ing re­peal of the Obama ad­min­is­tra­tion’s “net neu­tral­ity” reg­u­la­tions that im­posed pub­lic util­ity-style reg­u­la­tion on In­ter­net ser­vice providers, even though the com­mis­sion never found the ex­is­tence of a mar­ket fail­ure or con­sumer harm. While the FCC shortly may cur­tail those rules, the real­ity is that a fu­ture com­mis­sion could re­in­state them, along with the now-jet­ti­soned TV set-top box man­date, and other legacy reg­u­la­tions that might be elim­i­nated by the Pai com­mis­sion.

The pos­si­bil­ity of reim­po­si­tion of un­nec­es­sary reg­u­la­tions at­trib­ut­able to an­other change in ad­min­is­tra­tion is dis­turb­ing. Bur­den­some reg­u­la­tions not nec­es­sary to pro­tect con­sumers from ac­tual harm are costly to the na­tion’s econ­omy. For ex­am­ple, in an­nounc­ing a pro­ceed­ing to re­peal the 2015 net neu­tral­ity rules, Mr. Pai cited Free State Foun­da­tion re­search in­di­cat­ing that those rules al­ready had re­sulted in more than $5 bil­lion in fore­gone in­vest­ment by In­ter­net ser­vice providers.

We need a #Com­mAc­tUp­date that will put com­mu­ni­ca­tions pol­icy on a sta­ble foot­ing that is not sub­ject to bu­reau­cratic whims and pro-reg­u­la­tory pre­dis­po­si­tions di­vorced from mar­ket­place re­al­i­ties.

Here is the essence of what should be done.

At the core of the cur­rent law is a “silo” regime that places var­i­ous ser­vices in dif­fer­ent reg­u­la­tory buck­ets based on techno-func­tional char­ac­ter­is­tics. This of­ten re­sults in the reg­u­la­tion of com­pa­ra­ble ser­vices in a dis­parate man­ner. For ex­am­ple, mes­sag­ing ser­vices are reg­u­lated dif­fer­ently de­pend­ing on whether they are clas­si­fied as “telecom­mu­ni­ca­tions” or “in­for­ma­tion ser­vices,” and video ser­vices are reg­u­lated dif­fer­ently de­pend­ing on whether they fit into the “broad­cast,” “ca­ble,” or “wire­less” si­los. More­over, there are over 100 pro­vi­sions in the cur­rent law del­e­gat­ing au­thor­ity to the FCC to act in the “pub­lic in­ter­est.” This wholly in­de­ter­mi­nate stan­dard con­fers too much dis­cre­tion on un­elected bu­reau­crats.

A new Com­mu­ni­ca­tions Act should elim­i­nate the ex­ist­ing reg­u­la­tory si­los and most of the vague “pub­lic in­ter­est” del­e­ga­tions ex­cept, say, for mat­ters closely re­lated to pub­lic safety. The com­mis­sion’s reg­u­la­tory au­thor­ity should be cir­cum­scribed by ty­ing it ex­plic­itly to a competition stan­dard grounded in an­titrust-like ju­rispru­dence. This means that be­fore adopt­ing reg­u­la­tions and en­forc­ing sanc­tions, the agency gen­er­ally would be re­quired to find con­vinc­ing ev­i­dence of a mar­ket fail­ure and con­sumer harm, rather than re­ly­ing on al­lu­sions to the “pub­lic in­ter­est.”

Fur­ther­more, cer­tain mat­ters in­volv­ing the prac­tices of In­ter­net ser­vice providers, such as pri­vacy and data se­cu­rity over­sight, should be trans­ferred to the Fed­eral Trade Com­mis­sion. And state au­thor­ity to reg­u­late dig­i­tal broadband net­works should be cir­cum­scribed. While tra­di­tional state reg­u­la­tion may have made sense in the ana­log age when it was gen­er­ally pos­si­ble to dis­tin­guish be­tween “long dis­tance” and “lo­cal” com­mu­ni­ca­tions, now nei­ther con­sumers, ser­vice providers, nor reg­u­la­tors can de­ter­mine eas­ily, if at all, and not with­out sig­nif­i­cant costs, the ori­gin and des­ti­na­tion of dig­i­tal traf­fic. State reg­u­la­tion would de­tract from the economies of scale associated with na­tional dig­i­tal net­works.

It’s time for Congress to up­date the Com­mu­ni­ca­tions Act in a tech­nol­ogy-neu­tral way that puts re­straints on reg­u­la­tors that all too of­ten haven’t been able to re­sist sub­sti­tut­ing their predilec­tions con­cern­ing the “pub­lic in­ter­est” for the com­pet­i­tive mar­ket­place’s de­ter­mi­na­tion of what ser­vices in­ter­est the pub­lic.


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