Why We Need Telcom Reform–And Won’t Get It

No matter what your feelings about telecommunications regulation, you probably believe that the regulatory framework should reflect technological and business realities. That’s not the case today for the rules governing the communications industry. And there’s very little chance the situation will get better any time soon.

In the most recent skirmish with reality, it looks like there’s a fair chance the Federal Communications Commission is going to get slapped down in its effort to sanction Comcast for violation of its network neutrality principles. The issue that I think matters is not whether net neutrality regulation  is a good idea or not–personally, I think some modest regulation is needed–but whether the regulators can even approach the subject in a rational manner.

It’s always dangerous to predict what an appeals court will do based on questions from the bench during a hearing. But the skeptical questions asked by judges of the D.C. Circuit Court of Appeals suggest that Comcast is likely to win its challenge. Time after time, courts have slapped down the FCC when it has tried to push the limits of the authority Congress granted in the 1996 rewrite of the Communications Act of 1934. Chief Judge David Sentelle summed up this judicial attitude at the hearing:  “You can’t get an unbridled, roving commission to go about doing good.” Should the three-judge panel side with Comcast, that would all but doom FCC Chairman Julius Genachowski’s efforts to formalize and expand the FCC’s informal net neutrality guidelines.

Even under the far more laissez-faire leadership of Michael Powell and Kevin Martin during the Bush Administration, the FCC kept running into legal roadblocks as it attempted to adapt regulation to a rapidly changing technological environment. The most serious was the Supreme Court’s 2005 decision in NCTA v. Brand X Internet in which the court put strict limits on the FCC’s powers to regulate “information services.”

The 1996 law is a dog’s breakfast of a bill that was hopelessly obsolete by the time it was signed. It’s hard to believe just 14 years later, but some of the bitterest fights were over the separation of long distance and local telephone services. And even had the lawmakers been more technically astute, it is unlikely that they would have realized that the distinction they created between “telecommunications services” and “information services,” intended to differentiate between traditional voice services and the then-nascent online data services (America On Line was a much bigger deal in 1996 than the Internet) would soon become both mischievous and meaningless.

Unfortunately, there is no prospect for Congress taking up telcom reform any time in the foreseeable future. I raised the issue while moderating a panel of policymakers at the Tech Policy Summit at the Consumer Electronics Show last week. All the panelists, representing the White House, Commerce Dept., the FCC, and the House Energy & Commerce Committee agreed that a legislative overhaul was desirable. And they agreed even more forcefully that given all the other issues on the congressional and Administration agendas, it isn’t going to happen.

So network neutrality regulation is likely to become another casualty of this regulatory paralysis. This is not a disaster; the Comcast dispute that inspired the original case was actually resolved even before the FCC became involved and Genachowski’s proposals are designed more to deal with prospective problems than current issues. But I think we’d all be better off if the FCC had some modern tools to deal with the constantly evolving world of telcom technology.