Outdated and Expansive Regulatory Framework Discourages Telecom Investment, Professors Say

The current regulatory landscape doesn’t provide equal footing, said Leslie Marx, professor of economics at Duke and former FCC chief economist under Chairman Kevin Martin. Cable companies, which unlike ILECs are not required to maintain legacy copper networks, have led the way in infrastructure development and buildout, she said. Carriers have seen a similarly hands-off approach, she said. It’s critical to maintain regulatory framework that incentivizes private investment in broadband infrastructure, she said. The Internet has “flourished under a light-touch regulatory framework,” and regulatory certainty would ensure this continues, promoting investment into telecom infrastructure, she said.

There are two competing stories being told about broadband in the U.S. today, said Michael Santorelli, director of the Advanced Communications Law & Policy Institute at New York Law School. One narrative portrays the U.S. telecom market as inferior to the rest of the world, and proposes relying on regulation to correct perceived wrongs in the market, he said. This remedy “calls for turning back the clock about 100 years to a regulatory framework that was developed for the telephone,” he said. The alternative tale, “grounded in fact and supported by ample data,” looks at the $1 trillion of investment in broadband that has happened since 1996, giving well over 90 percent of U.S. households access to a wireline or wireless broadband provider, he said. This story shows that consumers are benefiting from an “intensely competitive” market, he said. The question then becomes how to sustain this momentum, he said. “This is where notions of regulatory modernization should come into play.” The country is at a “turning point,” and the FCC has an opportunity to remove some of the barriers holding back deployment of faster and more robust networks, he said.

The government should step in where there are market failures, and it properly does so in the context of universal service, said Anna-Maria Kovacs, visiting senior policy scholar at Georgetown University. But there’s tremendous competition in U.S. telecom markets, with a half dozen choices between wired and wireless providers available in most markets, she said. Continuing to regulate the way we have would “disincent investment” and limit choices for consumers, she said, arguing the FCC should offer the minimum number of regulations that are “essential for consumer protection.” Kovacs cautioned against government getting involved in broadband pricing policies, arguing those who use more data should pay more. In terms of equity and managing network traffic, “tiered pricing plans make good sense and there is no particular reason why anyone should be regulating those,” she said.

The last several years have seen an FCC administration that tilts toward regulation, said Bret Swanson, president of Entropy Economics, which focuses on technology research. Net neutrality regulations, data roaming mandates and the Section 706 order have been seen by some as “an extension of regulatory power that may not be grounded in existing law,” he said. This expansion of authority “cries out” for a modern and forward-looking “simpler framework of law going forward,” he said.