Telecom Act Described as Boosting Net Growth and Investment, Despite Flaws

There was general recognition any new overhaul will have to overcome deep partisan and industry divisions. That's according to the panelists, two days worth of statements by various parties and journal recollections of the act's passage 20 years ago (from last Monday) to its current implementation.

The U.S. Internet economy is the “envy of the world,” said former Rep. Rick Boucher, D-Va., who credited the Telecom Act with laying the foundation. U.S. Internet companies “dominate the world,” agreed former FCC Commissioner Harold Furchtgott-Roth. Former NTIA Administrator Larry Irving said the act helped spur $1.5 trillion to $1.7 trillion in investment over the last decade. The act stoked higher output, lower prices, and “stunningly high” investment, said Georgetown economics professor John Mayo. All are experts on the issue, with Furchtgott-Roth an economist with private-sector clients, Irving a consultant with telecom and IT clients and Boucher at the Sidley Austin law firm and allied with ISPs.

Boucher said the act did a good job of sparking competition in phone and cable markets dominated by one or a few providers. Boucher said the act protected the nascent Internet from Title II common-carrier regulation by codifying and defining “information services” under Title I of the Communications Act. On the down side, “I wish we had added two more words” to the definition, he quipped, in a reference to FCC reclassification of broadband access as a telecom service under Title II. Requiring incumbent telcos to give competitors discounted wholesale access to their networks was a good idea, but the mandate should have been eventually eliminated, he said, noting many CLECs still lease out incumbent copper wires.

Furchtgott-Roth said 1996 “was a different time” because telecom wasn't partisan. Coalitions came together to push legislation through as industry “patience was wearing thin … people were almost desperate,” said Furchtgott-Roth, a former aide to then-Rep. Tom Bliley, R-Va. Local and long-distance telcos wanted to get into each other’s markets, cable wanted to escape rate regulation, and broadcasters wanted ownership relaxation, he said. Overall, the act worked generally well for industry, with exceptions, he said, but the sectors that have done the best were the ones that weren't the target of the law, particularly online services provided by companies such as Facebook and Google.

The FCC took “a lot of liberties” and engaged in “regulatory overreach” under the act, Furchtgott-Roth said. But he gave then-Chairman Reed Hundt substantial credit for the agency’s initial implementation of the new law, even though he disagreed with some of what he did. “Like him, love him, hate him, despise him -- whatever your views of him,” Hundt was “very aggressive” and provided strong leadership on many key decisions, most of which were upheld in court, albeit with judicial deference, Furchtgott-Roth said.

Irving said telecom policy in 1996 was “not just bipartisan, it was nonpartisan.” Interests were more local and regional than ideological, said Irving, who like Boucher also is now an Internet Innovation Alliance co-chairman. Irving said the act was “not an Internet bill” and could have been done differently, but it contributed to an Internet revolution that “was probably the greatest promoter of democracy” in the world and that “only the U.S. could have led.”

Boucher urged a new communications rewrite in 2017 that would start by defining broadband access as a Title I information service. He said lawmakers should codify and make permanent “strong net neutrality protections,” perhaps based on 2010 FCC rules. “This is a worn-out debate. Everybody’s tired of it,” he said. Irving agreed: “Why do we continue to have this battle?” He said the basic compromise was well understood: “Let’s just codify it and move on.” But it’s hard to hammer out a deal when one side or the other has the upper regulatory hand, so a lot depends on the courts, he said.

Boucher backed sunsetting copper networks, giving government agencies financial incentives to sell their spectrum, establishing a “Privacy Bill of Rights” overseen by the FTC and restructuring the FCC. He also urged modernizing Lifeline USF low-income support, but acknowledged the FCC may largely address that soon.

Furchtgott-Roth said he agreed with most of Boucher’s proposals but said there’s not much consensus on the need to legislate, and even less so on substantive details. He said privacy and cybersecurity issues could help drive legislative efforts. Irving suggested parties will grow increasingly tired of regulatory uncertainty and seek new legislation at some point. Citing a metaphor used by then-Sen. Conrad Burns, R-Mont., in the 1990s, Mayo said it's time to start to dance, though it could take a while to get to the altar.

More 'Recollections'

The Federal Communications Law Journal posted numerous essays on the Telecom Act’s 20th anniversary, some of which we cited previously (see 1602080062), but here are a few more excepts from those recollections. "The greatest success of the 1996 Act has been its enduring light-touch regulatory approach to broadband Internet access and wireless markets," said Former FCC Chairman Richard Wiley and former FCC Wireline Bureau Chief Tom Navin, both now of Wiley Rein. "We have to admit that, for all of the inevitable flaws in the statute and its implementation, the 1996 Act has been a success overall," said CenturyLink Vice President Jeff Lanning.

"Sadly, the exceptional bipartisan consensus that gave birth to the 1996 Act and its liberating regulatory framework is breaking down," said NCTA President and past FCC Chairman Michael Powell: "Now, the ambiguity of the Act -- only getting worse with time -- is being used to resurrect a muscular regulatory model that places renewed (and unfounded) faith in regulators to manage the Internet." Current Commissioner Michael O'Rielly said: "My central lessons from the 1996 Act experience add up to this advice for my friends on Capitol Hill: be specific, include sunset provisions where appropriate to keep new technologies free from old rules and bargains that have nothing to do with them, and be forward-looking. There used to be greater trust between the Congress and the Commission with regards to executing the provisions of a law. That no longer holds, and it is all-important that Congress write exactly what it wants and does not want from the Commission. Do not leave it up to chance."

"The prematurely deregulated digital communications sector delivers more value to consumers, but that has nothing to do with deregulation; it is entirely a function of new technologies, which would have been deployed under all conditions," said Public Knowledge CEO Gene Kimmelman and Consumer Federation of America Director-Research Mark Cooper. "Without strong antitrust enforcement and enhanced regulatory intervention, the 96 Telecommunications Act is unlikely to ever produce the economic and social opportunities promised by its proponents."