February 8, 2016
by Rick Boucher & Larry Irving
Monday is the 20th anniversary of the Telecommunications Act of 1996, the last rewrite of the nation’s communications laws that set the stage for the competition, innovation and investment that we now enjoy but must not take for granted.
The act’s framers promoted light-touch regulation and a structure that led to an expanding Internet driven by new technologies, devices and applications. These forward-looking Clinton-era policies placed competition and investment as the central catalysts to drive innovation and advance consumer benefits.
Two stark paths now lie before the Federal Communications Commission (FCC): It can advance pro-investment, facilities-based broadband competition or it can discourage investment and broadband build-out.
Recent actions and announcements from the FCC indicate that the agency may be backtracking on the successful broadband policies of the past two decades. Rate regulation of broadband, for example, would negatively affect a growing sector of the economy by allowing government to place its hand on the scale rather than permitting market competition.
The FCC is required by law to determine annually the state of competition in the U.S. wireless market, but it fails to find the market competitive, even as nearly 80 percent of Americans have a choice of five or more wireless service providers. Consumers also have ample choices among plans and phone manufacturers.
Moreover, the agency has been reluctant to recognize competition among different technologies, such as between wired and wireless services. The 1996 act’s goal to promote cross-platform competition appears largely to have been realized, as triple- and quadruple-play plans for video, Internet and voice service are marketed by wired and wireless phone companies and by cable companies. More and more Americans are cutting the cord to landline phones.
The FCC also seeks to continue regulating last-generation business data lines that fail to meet today’s definition of broadband. In essence, it forces incumbent providers to invest in two networks, the old one that helps the business models still using copper wires and the new one that provides fiber for the high-speed broadband consumers and businesses want and need. Rather than give incentives for new fiber investment by competitors to serve business customers, the FCC continues to promote leasing of the antiquated copper network.
The agency has further dampened investment incentives by extending pro-leasing policies to wireless networks. It recently abandoned precedent that required wireless providers with spectrum to invest and build out their spectrum resources before leasing (roaming) on a competitor’s network. Why bother building out one’s own network, enhancing competition, if it’s easier to roam on the networks of others? This slows the effort to bring faster broadband to everyone.
Europe has tried to advance leasing at the expense of promoting investment and competition, and it resulted in less investment. Under those policies, Europe fell behind the U.S. in both broadband investment and deployment. In the U.S., broadband investment was $562 per household in 2012, compared with a meager $244 per household in Europe.
At bottom, it’s pretty simple. Competition and a light regulatory touch promote investment; regulations that deter competition deter investment.
A fitting anniversary celebration of the 1996 Telecom Act would be to stay the course so wisely set forth by Congress and the Clinton administration to encourage investment and innovation. We know it works. Just look at your smartphone.
Originally published at San Jose Mercury News