|
On October 24, 2013, the Free State Foundation held a lunch seminar at the National Press Club, entitled "A New FCC or the Same Old, Same Old?" Congressman Bob Latta, Vice Chair of the House Energy and Commerce Committee's Subcommittee on Communications and Technology, delivered keynote remarks in which he discussed his ideas for reforming communications law and policy in a less regulatory, more investment-friendly direction and for reorienting the FCC's mission.
And, anticipating the arrival of a new FCC Chairman and Commissioner, four policy experts engaged in a lively, informative discussion concerning whether the FCC should reorient its mission and its way of doing business. How should it do so? Can it accomplish such changes itself or does Congress need to act?
Keynote Remarks: CONGRESSMAN BOB LATTA, Vice Chair, House Energy and Commerce Committee's Subcommittee on Communications and Technology
The panel discussion was moderated by RANDOLPH MAY, President of the Free State Foundation. The panel consisted of the following policy experts:
- JAMES ASSEY, National Cable & Telecommunications Association
- WILLIAM KOVACIC, George Washington University Law School and former FTC Chairman
- JAMES SPETA, Northwestern University School of Law
- ROBERT QUINN, AT&T Services
Closing remarks were offered by DEBORAH TAYLOR TATE, Distinguished Adjunct Senior Fellow, The Free State Foundation, and former FCC Commissioner.
The transcript should be read in its entirety for a full appreciation of all of the views of each participant. Nevertheless, in the meantime, immediately below are selected excerpts in the order of the panelists' presentations following Rep. Latta's remarks. These excerpts provide an indication of the various perspectives presented at the seminar. But, again, the transcript should be read in its entirety in order to obtain a full appreciation of each participant's views. And if you would like to watch the YouTube video of the seminar, it is here.
CONGRESSMAN BOB LATTA
Mobile and broadband investment has exploded, creating more than one million jobs over the last five years -- And that is something we ought to keep bringing up over and over, is how many jobs are being created in this sector. When you look over those last five years, this sector has enabled the more rapid rollout of 4G LTE wireless technology across the United States. This advanced technology has not only spurred innovation in the communications marketplace, but it has also promoted growth and innovation in many other industries as well, including health care, transportation, and energy. In order to continue to build on this technological process and innovation, it is important to review laws and regulations and make sure they reflect today's marketplace and don't impede further advancements in communications and other sectors of the economy.
It is clear we need to comprehensively review the outmoded 1996 Act and to develop a new policy framework to address the modern communications of the 21st Century and a rapidly evolving Internet economy to ensure that outdated and unnecessary legacy era regulations don't stifle current and future investment, innovation, economic growth, and consumer choice in the digital age.
You don't want to stifle that investment, you don't want to stifle that innovation, things are changing and we have to keep up with that. That is one of the things that we've said, that in many cases out in the industry, you might be two, three, four steps ahead of us before we can ever get a law written.
There are simple steps we can take to make sure that this pro-investment, pro-competition and, most importantly, pro-consumer framework is a reality. One step is through reform at the FCC: A review of the FCC operations and its role in the communications sector... To that end, we should statutorily reform the FCC to codify best practices, make the agency more transparent, and enable deregulatory procedures to improve regulatory certainty and stimulate increased investment in the economic growth in the telecommunications industry.
Over-regulation, again, it is stifling our ability to innovate and create jobs here in the United States and the cost of regulation to our economy is too great to ignore.
The telecommunications industry drives a significant portion of economic growth in our country. Nearly $250 billion in private capital has been invested in U.S. wired and wireless broadband networks since 2009. There has been more private investment in the information and communications technology sector than in any other sector of the U.S. economy. That is incredible. As members of Congress, we should make sure that the FCC does not produce regulations that will obstruct this kind of investment.
Earlier this year, as mentioned, I introduced the "FCC 'ABCs' Act." This legislation requires the FCC to conduct a cost/benefit analysis in any Notice of Proposed Rulemaking, amendment to a rule, or final rule, that may have an economic impact -- an economically significant impact.... [I am] one that truly believes that we have way too many regulations out there ... We have about $1.7 trillion of regulations in this country ... In addition to requiring those cost/benefit analyses, this legislation would also modify the Commission's forbearance authority ... This would empower the FCC to reach deregulatory decisions in regard to communications carriers as Congress originally intended.
Technological developments and innovation have promoted robust competition and created a marketplace that is more efficient and better able to protect consumers and government regulation. These advancements have rendered many regulations to be outmoded and excessively burdensome on an industry that is absolutely essential to job creation and our nation's economic growth. We should do what we can to prevent these onerous regulations from obstructing future technological advancements, progress, and innovation.
The [cable set-top box] integration ban has outlived its usefulness and has cost consumers far more than it has benefitted them. It is time to remove the regulatory barriers and allow the marketplace to drive the next generation of innovation. Congress must surely get out of the way and stay out of the way ... Congress should be encouraging and enabling growth and ideas, not holding back those taking risks and making substantial investments.
JAMES ASSEY
I think there are some important trends that give us great hope. We have incredibly robust competition in communications markets, both horizontally but also vertically as well, as players in different parts of the communications stack are competing to provide consumers with the services they are increasingly demanding ... The challenge for the FCC, I think, is roughly three-fold. First, how do we continue this positive story? We have created a virtuous cycle of investment and innovation. What strategies can we adopt as a Commission to ensure that continues for the foreseeable future? Secondly, how can we adapt the statute we have to reflect changing market conditions? And then, lastly, what are the gaps where we need the government and the FCC to step in when the market will not meet the social goal that we are trying to reach?
I think [Congressmen Latta] has done a great service in identifying an FCC rule with respect to the integration ban in his bill, H.R. 3196, that has demonstrably outlived its usefulness. We are talking about a world in video that is more competitive than it has ever been before. We have evolved from a market in which in 1992 cable operators controlled 98 percent of video distribution. Today that number is down to 55 percent and falling, and yet we are left with a rule that essentially requires the cable operators, and I should say cable operators alone, among its video competitors, to go to the FCC and ask permission to innovate.
My hope for the future after the decision [on the Open Internet Order] is handed down is that the FCC, whatever it chooses to do or whatever it is able to do, returns to first principles, returns to that regulatory humility that I spoke of, and that has benefitted consumers immeasurably by launching this tremendous cycle of innovation and investment, and that continues to inure to their benefits and building faster networks as far as the eye can see.
We are very supportive of legislation to look at process reforms. Obviously, you don't always need a law. Sometimes you can just change the processes. The integration ban bill by Congressman Latta is a great example of an area where historically we have had trouble. The cable industry has had to go seek waiver upon waiver upon waiver. We waited a year before we could get a waiver for these very low cost standard definition devices -- the size of basically a pack of credit cards -- that could perform a tuning function on your second or third set. A year before we could do that ... If we have to wait two plus years to go through a waiver process that can kind of drag on and on, that is not good for consumers, that is not good for innovation, and that is a process that we ought to take a look at.
I think we have to constantly challenge ourselves not to look at the law as it was enacted at the time it was enacted, but also to constantly test the relevance, to constantly assess the costs that are being created by regulation versus the benefits, if there are any.
ROBERT QUINN
I think the FCC absolutely needs to reorient itself. It is an agency that was created almost 80 years ago to regulate a monopoly wireline voice world that doesn't exist. I think they adapted to end up regulating what I think they would consider to have been at the time a monopoly cable environment ... [A cable monopoly] certainly doesn't exist now.
I actually think [the FCC does] need to reorient, and I think it's not just the FCC. I think it's regulation in general in this country ... I really believe we have to have kind of a whole restart, if you will, on the regulatory mindset, because the regulatory mindset at both the state and federal level was designed to regulate a wireline voice monopoly.
I think the fact that the FCC hasn't really done anything on our IP transition position which will be one-year old on November 7, 2013 is evidence that they don't know exactly how to make this transition into the new world and they are not ready to declare what their role is going to be ... if VoIP isn't a telecommunications service, then the state commissions don't have a role or a clearly defined role like they do under the current Title II world that everybody lives in. I think that is going to be the biggest issue for people to get over, and the FCC absolutely has to reorient to deal with it.
The Commission clearly has jurisdiction over information service providers. There is a whole series of Orders where the FCC deregulated IP-based services ... The FCC said, hey, we don't have to decide whether this is an information service or a telecommunications service -- which are code words for common carriage and non-common carriage under the current law that we have. We don't have to decide because we have jurisdiction over both. The Commission really has to reorient itself to start thinking about these services not in the way they were provisioned for the last 100 years. The FCC has to start thinking about these services and how they are going to be provisioned for the next 100 years.
JAMES SPETA
Wireless markets are fairly vigorous, the general Internet ecosystem is quite vigorous, there continue to be many interesting stories of the development of adjacent market competition, which I think has been one of the great success stories of the Internet. I will temper that by saying if not either optimism or pessimism per se, there is some cause for caution for it is undeniable that there are certain market and business model developments that can pressure what have been the fundamental norms of Internet openness on which this vibrant ecosystem depends.
As to DACA [the Digital Age Communications Act] specifically, I still think this framework has a ton to recommend it in two senses. The first sense is what I have just adverted to, the fundamental assumption that DACA starts with: That networks, at least networks in what we call the Internet ecosystem, should be interconnected, but recognizing simultaneously that that interconnection is largely provided by the market; and then second, in the sense that DACA demands a fairly clear theory of anti-competitive consumer impacts as a predicate to much administrative action.
At one level, of course, the Open Internet order does seem to be operating in large part against the backdrop of competition theory, but the discussion of that competition theory is not in my view closely enough tied to findings about the market structure. And the regulatory requirements are not explicitly tied to market characteristics in the sense that they are not tied either to a carrier's dominant position or the carriers being vertically integrated into content or services.
I view the FCC's ability to make predictive judgments not as a license for loose theorizing, but as an opportunity for rigorously constructing a more concrete notion of competitive markets and regulation that is clearly tied to those market consequences.
I think the [net neutrality] case matters a little bit more than for those of us who write telecom case books, and I include myself. The easiest path to a clean win for the FCC is for the Court of Appeals to say what the Supreme Court said in City of Arlington is in fact what they meant, administrative law professors' doubts notwithstanding, and the FCC is entitled the maximize Chevron deference any time it decides what its ancillary jurisdiction is... The second issue is yes, I'm optimistic the Internet will remain open, et cetera, but I'm among those who look at some of the developments of integrated vertical business models and the Internet and say to myself, there is some reason to think that our fundamental presumptions of openness that have continued to generate this ecosystem face some pressures. That is the second part of the stakes that I think this case involves.
WILLIAM KOVACIC
It is impossible to imagine the FTC playing that role, and impossible to imagine the U.S. having a coherent national data protection policy if a stunningly important part of the information services sector is not subject to its oversight. How will the United States achieve a broad set of coherent, consistent data protection rules if the common carrier exception remains in place? ... So long as that part of the information services economy [is exempted] ... the United States will not achieve anything faintly approaching the more coherent, consistent, and rational platform for policy-making that is seen as indispensable if it is to have sensible policies at home as well as a coherent voice abroad.
When you look at the role that other jurisdictions are playing to get the regulatory framework right, who stands alone in its indifference to the regulatory architecture? We spend so much time talking about the feasibility of making bullet trains with no discussion in the regulatory arena about the adequacy of the infrastructure ... We talk about larger policy reforms. We don't talk about the regulatory infrastructure over which policy must travel. Let me give you one suggestion if we don't want to address that head-on. How about a policy of transparency which the FCC could adopt, which clearly identifies measures that are adopted only pursuant to the public interest mandate, that denominates clearly the matters that are relevant to competition policy but where the Venn diagrams of analysis don't overlap, to spell out precisely the remedial measures that are adopted pursuant to the public interest mandate and explain how they advance the public interest, not to shroud them with a larger set of considerations associated with the competition policy mandate.
What about giving the entire mandate to the Department of Justice so we don't go back to that common carrier exception? Why not give the entire competition mandate to the Department and leave the FCC to do the additional public interest review perhaps in association with the Department of Justice?
So many other jurisdictions are taking very seriously the question of how to establish a policy-making infrastructure that promotes coherent national results in the expectation that if you achieve a better policy-making infrastructure, you will increase the possibilities for delivering good economic results for your citizens, The United States complacently is missing a good game.
One point on process reform that has great stakes for the entire administrative state is the Sunshine Act. If you were seeking to develop a measure that would go a great way to disable the effectiveness of collaborative decision-making, and you were inimical to the interest of the United States, and you want to encumber the administrative process, I think you would draft something like the Sunshine Act. You would say I like this measure because it is going to get in the way of the collaborative process working effectively .... I think there is an issue here, a larger question, about the functioning and operation of the collective decision making process as it was intended, thus worth discussing as part of a larger deliberation about the administrative process.
DEBORAH TAYLOR TATE
Why is it so important that there is regulatory consistency? It is not solely about our economy, although as we know, it is about a fifth of our economy, but it is also about education and entertainment and health care and jobs. I thought that was really interesting that Congressman Latta brought up the million jobs that are in this sector. That is why that is so important. That is why, as the Free State Foundation says, ideas do matter, they really do matter for this country.
We do have to continue to be not only the innovation leaders, not only the economic leaders in this world, but we have got to continue to be the policy leaders. The FCC, when I first started, on my very first trips to the ITU, every time I got introduced, it was as the gold standard for the entire world in terms of regulation. I don't know if my colleagues are being introduced that way now or not.
My advice to the new FCC is ... before you take one step toward an order or any kind of policy or regulatory action, what is the legal authority for what you are doing? ... Is the rule or regulation or policy really necessary or does it stifle investment and competition? Then, if it does, please stop. Stop before you do anything ... Stop over-regulating, stop stifling U.S. companies' ability to invest. Stop sending more costs to consumers by passing more unnecessary regulations. I loved the point about forbearance. Stop not using forbearance. Finally, will you please do no harm for all of us.
A PDF of the full transcript of "A New FCC or the Same Old, Same Old?" is here.
| 
