Lawmakers should downsize the U.S. Federal Communications Commission by taking away its power to review mergers in the telecom industry and most of its power to pass regulations before evidence of a problem, two telecom experts said Tuesday.
It doesn't make sense for the FCC to maintain monopoly-inspired regulations on telecom-based broadband carriers when there's healthy competition from mobile broadband, satellite broadband and other providers, said Robert Litan, director of research at Bloomberg Government and co-author of an upcoming book on broadband policy.
The FCC should focus largely on encouraging competition in the areas of the country that have one broadband provider instead of enforcing old regulations and creating new ones based on a model of telecommunications that no longer exists in the U.S., argued Litan and co-author Hal Singer, managing director and principal of Navigant Economics, during a discussion at the Brookings Institute.
"We believe that public policy should be focused primarily on removing the remaining regulatory barriers that prevent, or that discourage, other broadband providers" from expanding their service, Litan said.
New 4G LTE services far surpass the 4Mbps download speeds defined by the FCC as broadband speed, but the FCC still regulates fixed broadband as if that competition doesn't exist, Litan said. The FCC should focus on eliminating regulations for mobile broadband providers in an effort to prompt them to expand their networks, he said.
The FCC should repeal its net neutrality rules as well as carrier-of-last-resort rules for telecom carriers, Singer said. Under old regulations, traditional telecom carriers are required to maintain their legacy telecom networks as well as new Internet Protocol networks, and repealing regulations would allow them to retire their copper networks in favor of fiber, he said.
Instead of the FCC's current rulemaking procedures, the agency should move to passing rules only after the evidence of a problem in the broadband market, Litan and Singer recommended. The FCC or lawmakers should end the agency's antitrust merger reviews, leaving that function to the U.S. Department of Justice, and take away the agency's ability to set conditions on spectrum auctions, they said.
Under its existing rulemaking procedures, the FCC and its staff have been prone to allow so-called rent seeking, in which regulated companies seek competitive advantages through agency rules, Singer said.
Most of the panelists during a Brookings discussion on the proposals from Litan and Singer, tended to agree with the authors. The two authors are publishing the book, Singer said, to start a discussion about telecom regulations as carriers move to all-IP networks, but the proposals sound similar to FCC downsizing ideas pushed by Verizon Communications and Senator Jim DeMint, a South Carolina Republican, in recent years.
Panelist James Cicconi, AT&T's senior executive vice president for external and legislative affairs, targeted the FCC's 2010 net neutrality order as an example of regulation without major evidence of a problem.
"The commission would be wise to focus its regulations going forward on actual problems in the market, rather than hypotheticals," Cicconi said. "They should be hinging their regulations on actual data based on actual problems and not on hypotheticals dreamed up by some advocacy group."
But there's little evidence that the FCC's net neutrality rule has hurt telecom investment, said Blair Levin, a communications and policy fellow at the Aspen Institute and lead author of the FCC's 2010 national broadband plan. Levin questioned whether the proposed policy of the FCC regulating on a case-by-case basis would help investment or lead to more uncertainty among investors.
As telecom carriers move to all-IP networks, the FCC will need to provide a road map for consumers and providers, Levin added. "I hope the commission lays out a clear path, rather than just addressing things when problems arise," he said.
Others questioned proposals to take away power from the FCC. Broadband content and services are changing, but government oversight of telecom and broadband is still needed, said Matt Wood, policy director of Free Press, a digital rights group.
"What hasn't changed is the fact that a few providers still control these networks, with companies like AT&T and Verizon dominating the wireless space and cable controlling most of the high speed connections into people's homes," he said by email. "These giant corporations have the same incentives and the same ability they've always had to freeze out any innovation or competition that might cut into their own profits."
The coming transition to all-IP networks is a good time to review telecom regulation, added John Bergmayer, senior staff attorney for Public Knowledge.
"But there's nothing about IP vs. switched networks, or fiber vs. copper ... that reduces the odds of communications markets becoming monopolistic or oligopolistic, or makes carriers behave in less self-interested ways," he said by email. "Last-mile bottlenecks present similar problems whether they're coaxial, copper telephone wires, or fiber, and small carriers face the same build-out and interconnection challenges regardless of their particular technology."
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.
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