Section 706's Deregulatory Directive:
Accelerate Broadband by Removing Regulatory Barriers
by
Seth L. Cooper *
[Below is the Introduction to this latest FSF Perspectives. A PDF version of the complete
The FCC will soon be releasing its Ninth Broadband Progress Report - or "706 Report." Data published since the last 706 Report suggests further strides have been made in broadband deployment. As of June 2012, some 95% of Americans had access to broadband. Closer to 98% had access if you include 3G wireless. And since June 2012, according to the data, 4G LTE network coverage has expanded even more.
But if the next 706 Report follows its predecessors, the FCC might declare yet again that, in spite of such widely-acknowledged progress, broadband is still not being timely deployed. And, if it follows prior reports, the FCC might emphasize again its ongoing regulatory initiatives or call for new regulatory intervention in the broadband market.
One can bemoan the FCC's unduly negative gloss on the state of broadband deployment. But one shouldn't belabor it. More important than any positive or negative conclusions by the FCC are the agency's policy prescriptions. Unfortunately, the FCC has preferred a pro-regulatory approach that leaves existing regulatory barriers to broadband deployment in place and risks creating new barriers.
It's time to counter that pro-regulatory approach on its own terms. Even accepting another FCC negative finding about broadband deployment, however wrong such finding might be, we need an alternative policy approach to accelerate broadband deployment by removing barriers to infrastructure investment. We need a broadband policy for promoting broadband deployment that is deregulatory and market-driven, consistent with the deregulatory terms of Section 706.
There are a number of things that the FCC can do to remove regulatory barriers to broadband infrastructure investment.
First, the FCC can forbear from enforcing analog-era, legacy telephone regulations.
Those regulations were premised on monopolistic conditions and impose a financial drag that diverts resources from broadband services. An FCC process of elimination can start with removing the remaining Computer Inquiry III rules regarding narrowbanding enhanced services.
Second, the FCC can promptly approve trials to facilitate the ongoing IP transition.
Relieving broadband providers from costly requirements to maintain old copper-based networks will free up resources for next-generation Internet Protocol-based technologies. The FCC should green-light geographically-targeted trials to assess the efficiency and effectiveness of deregulatory reforms as networks transition to all-IP.
Third, the FCC can set a sunset date for the public switched telephone network (PSTN).
A deadline would focus the efforts of the FCC and providers to better ensure that the IP-transition and PSTN retirement process is prompt. A PSTN sunset date should coincide with a deregulatory, market-driven framework for voice services in an all-IP world.
Fourth, the FCC can take targeted steps to remove regulatory barriers to cell site construction. The FCC should look for ways to expand on its Declaratory Ruling establishing a shot-clock for state and local government action on cell tower siting applications. It could, for instance, offer binding interpretations for certain statutory terms concerning what kinds of state and local regulations impermissibly "prohibit or have the effect of prohibiting" wireless services by creating "significant gaps in coverage." The FCC should also consider defining and adding categories of cell site infrastructure to the list of facilities categorically excluded from environmental processing because of their minimal impact on surrounding visual environments.
Fifth, the FCC can conduct the incentive spectrum auction in a simple and timely manner.The lack of available spectrum for commercial use can be attributed, in large part, to regulatory barriers to efficient reallocation of spectrum licenses. A successful two-sided incentive auction can help address those barriers. Allowing all wireless providers to participate is critical to ensuring not only that the auction meets bid revenue requirements set by Congress but that it raises the maximum revenue possible under the circumstances for taxpayers. Open eligibility is also essential to ensuring the most efficient approach whereby those carriers that will pay the most for spectrum licenses can put those resources to their highest use.
Sixth, the FCC can conduct prompt and principled reviews of mergers and secondary market transactions involving transfers of spectrum licenses. Mergers or secondary market transactions involving spectrum licenses can allow providers to more efficiently use such resources and accelerate deployment of next-generation services. FCC reviews should be consistently prompt, with any conditions imposed being related to the proposed transaction and consistent with consumer welfare. A proper analysis of today's wireless market should focus on prospects for continued heavy investment in infrastructure for next-generation wireless broadband networks.
If the FCC continues to suggest - wrongly, in my view - that progress in broadband deployment is a problem, a deregulatory and market-driven approach offers an answer. And it's sound policy, regardless of FCC deployment findings. Should the FCC continue to allow regulatory barriers to stand in the way of infrastructure investment, the agency will have itself to blame for any lack of timely and reasonably deployment of broadband services to all Americans.
* Seth L. Cooper is an Adjunct Senior Fellow of the Free State Foundation, an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland.
A PDF of the complete Perspectives may be accessed here.
