The second conference of the Federal-State Framework Working Group of the Digital Age Communications Act (DACA) project offered familiar reactions to our proposal, as well as some new ones. Speakers at yesterday's conference, hosted by the University of Colorado's Silicon Flatirons Telecommunications Program, displayed a rough consensus that the current allocation of responsibility among communications regulators should be adapted to the rapid evolution of the Internet era. Likewise, speakers generally agreed with the Working Group's report -- co-authored by reigning dean of "cooperative federalism" Phil Weiser -- in insisting regulators at all levels must not impede the competition, investment and innovation made possible by digital technologies.

Beyond that common ground, however, speakers' views diverged, generally echoing significant disagreements that erupted during the Working Group's deliberations. Without restating those here, a few observations of the conference are in order.

One of the central threads of discussion in the Federal-State working group has been on the apportionment of authority between each level of government. Today I came across the following passage and it serves as food for thought.

"[T]he States can best govern our home concerns and the general government our foreign ones. I wish, therefore... never to see all offices transferred to Washington, where, further withdrawn from the eyes of the people, they may more secretly be bought and sold at market."

Thomas Jefferson, letter to Judge William Johnson, June 12, 1823

If, as Stigler has persuasively argued, regulatory institutions can be captured and public officials of good will tend to work toward the ends of the regulated, which regulatory institutions are more susceptible? Federal or state? Or does the organizational structure matter more than the level of government? Email me your arguments.

If you believe the states are better equipped to resist capture or to err less grievously when captured than their national counterparts, consider that on the one hand, there is generally more diffused power among agencies and the legislature. But, on the other hand there tend to be fewer "watchdogs" at the state level.

It is very fashionable to argue against the role of state agency regulation, but the realities of the effectiveness of many state agencies and the notable shortcomings of the FCC make telecom a more complex case. Not to mention, the best uses of preemption--including by the FCC (think equipment regulation)--are when no regulation is appropriate. But the Title I model of DACA envisions a competition policy standard that will require some institution to develop and apply rules that will often turn on fact specific inquiries.

As a matter of institutional design, the Regulatory Framework that DACA proposes takes on the first important question--why should agencies and not courts administer telecommunications competition policy? (On the continuing role for an agency in managing telecommunications policy, you can see my explanation (developed with Jon Nuechterlein, my Digital Crossroads co-author) here.) That a critically important question, but its answer begged a second one: could the FCC do it all itself?

For a host of reasons, some of which Ray ably noted, we concluded that the FCC could not implement competition policy all by itself, even though an integrated federal framework was critical. In taking our best stab at a reasonable institutional strategy, we looked for ways to have both the feds and states play an effective checking function against one another as well as to enable the states to provide valuable institutional support for implementing a federal regulatory regime. After all, if there will continue to be regulation of interconnection and other competitively essential wholesale support (see other debates forthcoming), some agency has to do it. And for those who followed the FCC's one effort to do that in the case of Virginia, which opted out of implementing the Telecom Act, it's hard to imagine the FCC doing 51 of those.

The Federal/State Working Group's Report issued today. Like with the framework, consensus on some points proved easier than others. In the former category, the dual federalism model of the first 60+ years of communications rejected. The group's controversial questions centered then around the extent of preemption, and specifically preemption of all state rate regulation.

Some initial questions then:

1. Why not complete preemption of state authority; that is, why not cut the states out altogether?

2. Why leave any residual rates in place like the group does, even if it is a basic rate subject to attack under the framework's "unfair competition" standard?

3. How, exactly, would a delegation of competition policy authority to a given state work? Wouldn't there be inconsistent outcomes and procedures?

4. Counter to question 1, why not allow states more initial autonomy to experiment with different sorts of rate regulation and competition policy arrangements?

I am sure there are other questions and controversies that my fellow working group members can detail.