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 Summary

As the transition away from analog narrowband communications services to digital broadband Internet Protocol ("IP") services continues, the fundamental question confronting Congress and the Federal Communications Commission is this: Will the existing public utility-style regulatory framework be replaced by a new free market-oriented paradigm that accommodates and accelerates the ongoing broadband IP transition by taking into account the dramatic marketplace and technological changes that are continuing to occur at a rapid pace? Or, instead, will the regulatory framework be an impediment to progress?  The answer to this question has very important implications for the nation's economic and social well-being because there is widespread agreement that IP services, overall, provide consumers with more features and functionalities in less costly, more efficient ways than do copper-based time-division multiplexed ("TDM") services.

My testimony explains why, in order to enhance overall consumer welfare, the existing legacy regulatory framework, essentially a public utility-style common carrier model devised based on assumptions of a monopolistic market, should be replaced in a timely fashion by a free market-oriented model. And I will explain how, in this new paradigm, the FCC's future regulatory activity should be tied closely to findings of demonstrable market failure and actual consumer harm. In my view, the FCC presently may well possess the authority under the Communications Act to implement most of the regulatory changes necessary to facilitate completion of the digital transition, while, at the same time, safeguarding certain basic public safety and universal service interests. But to the extent such authority either is lacking, or the FCC fails properly to exercise such authority in a timely fashion, then, of course, Congress should be ready to act. And, in any event, aside from any near-term legislation that may be necessary or desirable, to ensure that the benefits resulting from the new marketplace realities that characterize the IP world are preserved without any backsliding, Congress ultimately should adopt a new "Digital Age Communications Act" along the lines I have long advocated.

In the late 1970s and early 1980s, traditional economic regulation of the airline, rail, bus, and trucking markets was largely eliminated, and this deregulation, initiated by President Carter's administration, was accomplished on a mostly bipartisan basis and in a symbiotic process in which Congress and the agencies (the Civil Aeronautics Board and the Interstate Commerce Commission) cooperated productively. The agencies generally initiated deregulatory changes through the administrative process while Congress engaged in oversight. And Congress eventually legislated to put in place consumer-enhancing deregulatory regimes that took account of the marketplace competition. A similar opportunity for positive change now exists.

Finally, I want to emphasize this: The FCC and Congress should not look at the inevitable IP-transition just as an opportunity to implement a new free market-oriented regime fit for the digital age. Given the stakes, implementing such a new paradigm should be viewed as a necessity. 

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