Time for FCC Overhaul
On Thursday, July 11, 2013, the House Committee on Energy and Commerce Subcommittee on Communications and Technology held a hearing on two draft bills, the FCC Process Reform Act and the FCC Consolidated Reporting Act, which was introduced on July 26, 2013 as H.R. 2844. On July 25, 2013, the Subcommittee voted to advance the bills to the full Committee by a unanimous voice vote. Similar bills were passed on a bi-partisan basis by the House in the last Congress, but failed to make headway in the Senate.
The Federal Communications Commission (FCC) oversees the work of the telecommunications industry, but in recent years has tried to insert itself into antitrust and consumer protection issues best left to other agencies. For example, on December 10, 2010, the FCC issued a Report and Order for an Open Internet, also known as net neutrality. These rules have created uncertainty in the marketplace; the U.S. Court of Appeals for the District of Columbia, will hear oral arguments in a case challenging the rules on September 9, 2013.
The net neutrality rules are not the only example of the FCC’s excessive regulatory reach. According to the Competitive Enterprise Institute’s (CEI) annual report card on regulatory costs, released on February 21, 2013, the regulatory burden imposed by the FCC on businesses amounts to approximately $142 billion per year, which places the agency behind only the Department of Health and Human Services and the Environmental Protection Agency.
Most federal regulations are far-reaching and place significant new burdens on consumers and businesses. This is especially true at the FCC, even as wireline, wireless and cable providers continue to invest billions of dollars, create jobs, and remain competitive during a tough economy.
The FCC has been regulating the telecommunications and broadcasting industry since it was first established under the Communications Act of 1934. Various laws to address changes in technology have been instituted over the years, most recently in the Telecommunications Act of 1996. Since that time, a surge in innovative technologies has re-imagined how people around the globe communicate and share information. Telephone companies no longer provide only telephone services, cable companies offer more than just TV viewing, and even technology companies like Apple, Google and Microsoft are changing their businesses to adapt to the ever-shifting communications paradigm, using the capabilities of broadband network services to provide cloud computing tools and services.
Trying to apply laws that were last updated in 1996 to a disruptive constantly changing industry no longer works in the twenty-first century marketplace. The regulatory system should allow freedom for innovative growth and an expansion of technology to address the needs of both consumers and businesses.
During the July 11 subcommittee hearing, former FCC Commissioner Robert McDowell expressed the need for reforming all of Title 47, which regulates the communications industry. Stating that “a comprehensive rewrite has not occurred since 1996, and even that left in place legacy ‘stovepipes’ that regulate technologies rather than market conditions,” McDowell called for “a fundamental rewrite of the nation’s laws regulating the information, communications and technology sector.”
In his testimony before the subcommittee, Free State Foundation President Randolph J. Mays cited the need for FCC reform, stating that “the Federal Communications Commission needs to change in a way that, in today’s generally dynamic, competitive communications marketplace environment, it will be less prone to continue on its course of too often defaulting to regulatory solutions, even when there is no clear and convincing evidence of market failure or consumer harm.”
Mays’ testimony reiterated what he wrote in his 2012 book, Communications Law and Policy in the Digital Age: The Next Five Years, in which he stated “marketplace and technological changes that have occurred since the last major revision of the Communications Act in 1996 have rendered existing law and policy woefully outdated, if not obsolete.” Citing industry changes such as the switch from analog to digital services and equipment, from narrowband to broadband network facilities, and from monopolistic to a generally competitive marketplace environment, Mays argued that these fundamental changes “call for a radical new communications law.”
Continuing to apply twentieth century rules and regulations to twenty-first century disruptive technologies and services will stymie innovation and make the marketplace less competitive. Moving forward the FCC Consolidated Reporting Act and the draft FCC Process Reform Act are a good start, but a comprehensive look at Title 47 and how it applies to today’s changing technology is also warranted.
