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Monday, May 1, 2006

Some Thoughts on the New Senate Telecom Reform Draft
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Earlier today the Senate Commerce Committee released its eagerly awaited "staff working draft" aimed at reforming the Communications Act of 1934 and the Telecommunications Act of 1996. It's tough to know where to begin evaluating this new 135-page monster, which is entitled the "Communications, Consumer's Choice, and Broadband Deployment Act of 2006." In true "everything-and-the-kitchen-sink" fashion, the measure tries to say a little bit about just about every aspect of modern communications and media law, and a whole heck of lot more about other issues not even found in the '34 and '96 Acts.

For example, you'll experience your first "this-is-not-your-father's-telecom-bill" moment when you open to page 4 and find that Title I is labeled "War on Terrorism." There's also a big subtitle dealing with copyright controversies and the so-called "video and audio flags." There's also a beefy section on "Sports Freedom" pertaining to local TV sports agreements. (Thank God our leaders are doing something to guarantee us our inalienable right to sports on TV!)

Again, that's just SOME of the new stuff the bill takes on. There's plenty more new rule-making authority found in the measure that would empower the Federal Communications Commission to deal with both new and old policy issues alike.

But instead of nitpicking about the trees here--I'm sure we'll be doing plenty of that at PFF over the next few weeks--I want to instead step back and look at the forest for a moment. It seems to me that the fundamental problem with efforts like this Senate draft is that our lawmakers often get obsessed with working out the smallest details of complicated communications / broadband / media marketplace developments. When pondering reform, a lot of very smart lawmakers and their staffers get together and wring their hands agonizing over hundreds of "What If?" scenarios about future market developments and then concoct a legislative response to each of them. This is how we end up dozens of pages of new rules on universal service policy (Title II of the bill), video service regulation (Titles III and IV) and digital television transition rules (Title VII) in addition to the new things mentioned above.

More "Mother, May I" Reforms

Of course, it is true that there is some liberalization proposed in this bill too, but it's typically of the "Mother, May I?" variety. "Mother, may I PLEASE get permission to enter the video marketplace and offer consumers a product they are clamoring for?" asks a new entrant. To which Mother Government answers: "Yes, you may my child, but only after you satisfy a long list of requirements or other concurrent regulatory obligations."

That, in a nutshell, seems to summarize the way almost all modern telecom "liberalization" reform works. Forget about true deregulation; today's "deregulation" is all just one big regulatory quid pro quo. You get a little freedom, but only at a steep price.

And it seemingly makes no difference that each new regulatory paradigm is upended every few years by the rapid pace of technological change. Twenty-five years ago, lawmakers obsessed over long-distance rates and a new regulatory regime was minted. But it became outmoded fairly quickly (especially with the rise of flat-rate cellular service in the 1990s). Fifteen years ago, cable rates attracted legislative attention and a new set of rules followed. But they quickly became viewed as counter-productive and were abandoned. Then, a decade ago, lawmakers began losing a lot of sleep over the local voice telephone market, and another regulatory regime was born. Opponents spent the last five years litigating it all the way up to the Supreme Court TWICE in an attempt to figure out how it should work only to see much of abandoned a few years later. And now comes the Net, broadband, VoIP, and new video services. Surprise, surprise... more new regimes have been proffered, including the 135-pages of new rules that the Senate proposed today.

A Better Way

At this point you might say: "There's got to be a better way!" There is, and it begins with the humble acknowledgment that in a field as complex as communications law - - which now includes cable law, satellite law, broadcasting law, First Amendment law, Internet law, and apparently even "War on Terrorism" law! - - it is simply impossible for even the most enlightened policymakers to know what lies around the corner and how best to deal with it preemptively.

So, what's the alternative to this sort of "Mother, May I" regulation? Well, I'd like to put forward the reform model that my colleagues here at PFF worked so hard to construct (along with dozens of respected academics and policy experts, I might add). The Digital Age Communications Act (DACA) project proposes to tear down the old regulatory paradigms and replace them all with an FTC-like "unfair competition" standard. Under DACA, the FCC would retain some baseline regulatory authority to oversee the marketplace but this authority would be quite limited and would be based on sound principles of competition law and economics (i.e. like streamlined antitrust regulation). Seriously anticompetitive corporate actions that lead to demonstrable consumer harm would still be policed and punished under DACA. But this would be done on a limited, case-by-case basis without prejudging business models or practices or by imposing prophylactic regulatory regimes.

I actually don't think the DACA effort goes far enough in terms of tying the hands of regulators, but it is vastly superior to the sort of continued heavy-handed regulatory approach embodied in the new Senate Commerce Committee draft. And, luckily, Senator James DeMint has recently introduced a proposal based loosely on the DACA framework. The folks on the Senate Commerce Committee certainly must have seen the DeMint proposal before they released their new measure. I would really like to know why they rejected such a sensible approach to the issue.


When you look around today, you see more marketplace competition and more technological innovation than ever before. And yet if you didn't know any better after reading through this new Senate proposal, you'd think that we face some sort of national crisis in the communications sector. It's time for our lawmakers to shed their "Chicken Little" paranoia about communications and media markets and to start seriously liberalizing these over-regulated markets. Today's new Senate proposal just doesn't get that job done.

posted by Adam Thierer @ 11:01 PM | Capitol Hill , Communications , Mass Media

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