The More Things Change, the More Regulations Cannot Stay the Same
Thirty years ago, Americans had plain old telephone service (POTS). In each community, one local telephone company offered a voice connection, referred to as “dial tone.” These rotary dials were considered a great improvement over the live operator who controlled a switchboard and personally connected each call. There was no Internet; there were no cellphones; and TV came from an antenna on the roof or rabbit ears on top of the set. That was the communications landscape of the time, and, my, what changes the last three decades have brought!
By the early 1990s, emerging competition in the long-distance telephone market and the desire to create competition in local telephone and cable TV services led Congress to engage in a multiyear exercise to overhaul the nation’s communications laws. This effort culminated in the passage of the Telecommunications Act of 1996. Feb. 8 marked the 17th anniversary of that law, which prompts me to reflect on today’s accelerating evolution in communications technology and the policy challenges these dramatic changes present.
The 1996 act focused on POTS. We wrote new rules to foster competition in both the local and long-distance telephone market. While we took steps to bring about greater competition in the local, multichannel television market, we hardly focused on the Internet. In fact, the Internet was only mentioned in one section of the act, which was later declared unconstitutional by the Supreme Court.
In other words, the 1996 act was designed for a world that is rapidly disappearing. Today’s consumers benefit from decades of innovation in telecommunications equipment and services.
The Internet is now pervasive, and broadband reaches all but the most remote places. Nine out of 10 American consumers can choose from five or more wireless providers. Packages of voice, video and data are offered to consumers by both wired and wireless providers who compete with each other on price, quality and the variety of service offerings. Cable, satellite, wired and wireless phone companies are engaged in furious cross-platform competition, giving consumers choices that were unimaginable 17 years ago.
Against this dynamic background, some clear and accelerating trends have emerged. For example, POTS is vanishing and voice service is transforming as we speak. Most consumers have now “cut the cord” to their telephone company wire-line service.
Approximately 25 percent of homes now subscribe to the phone service offered by their traditional local telephone company over that network. Indeed, communications traffic of all kinds is rapidly moving from the public switched telephone network to Internet Protocol-based networks.
Despite this, telephone companies are still required to maintain PSTN coverage to 100 percent of homes, effectively siphoning investment away from the faster and more capable networks that customers have demonstrated they prefer. No other broadband competitors are saddled with this regulatory obligation, and many are investing in high-speed broadband networks at a significant pace.
Against this backdrop, the Federal Communications Commission recently announced in the National Broadband Plan that the greatest telecommunications infrastructure challenge of this decade will be the transition from the old PSTN to IP networks. The FCC’s Technical Advisory Council went on to recommend that the PSTN sunset by 2018, after which voice, video and data will travel exclusively on IP networks.
Such a major transition will require thoughtful planning and the resolution of numerous policy questions. For example, we must determine the role of the federal universal service program and ensure that all consumers receive services at least as good as what they currently enjoy.
We need to preserve access to communications services for people with disabilities. We must retain basic consumer protections. And, lastly, we must make sure that services are reliable and affordable for lower-income Americans.
At the time of the 1996 act, I sought to serve my rural district by encouraging investment in new technologies more likely to reach rural areas. I believed smarter regulation would encourage greater competition, stronger investment and a more rapid arrival of capable telecommunications networks. I still do.
To address the complicated policy aspects of the IP transition, the FCC has opened multiple proceedings that address various questions. In addition, FCC Chairman Julius Genachowski recently announced the formation of the agency’s Technology Transitions Policy Task Force, which draws on expertise across the agency’s various bureaus.
These are welcome steps, but more can be done. In November, AT&T filed an IP transition petition calling for a national dialogue on the IP transition and recommending, as a matter of efficiency, consolidating the multiple open proceedings that consider policy aspects of the IP transition into one proceeding. A single proceeding allows focus, transparency and clarity. It provides a more meaningful opportunity for stakeholders, including consumers, to comment and become active participants in the IP transition policy formation process.
The petition also suggests that the FCC establish pilot “test” projects in selected communities across the nation where communications customers would rapidly be moved from the PSTN to IP networks. Such a “beta test” approach is modeled on a similar test that occurred in advance of the successful digital-television transition of the last decade. That transition took place only after a demonstration project in Wilmington, N.C., provided real-world data on how the transition would work in practice. We should do no less for the IP transition.
Seventeen years after the 1996 Telecommunications Act was signed into law, we find ourselves at another major inflection point. The IP transition is already under way, driven by technological advances and consumer preferences. FCC Chairman Genachowski has taken farsighted steps to create a process for addressing the policy questions that transition brings, and one of the giants of the industry has made helpful suggestions for a national dialogue through a single, focused proceeding for clarity and meaningful participation by all interested parties.
It is my hope that regulators can, once again, come to a consensus on how best to regulate fairly. Only with a level playing field will competition thrive and more investment in America’s broadband infrastructure increase. Let the conversation begin.
Former Rep. Rick Boucher, D-Va., served for 28 years in the House, where he chaired the Energy and Commerce Subcommittee on Communications, Technology and the Internet. He is honorary chairman of the Internet Innovation Alliance and chairs the government strategies practice at the law firm Sidley Austin, which represents communications companies among other clients.