Deregulate now
By Sen. John Sununu
Special to The Hill
October 20, 2005

For all the speeches, declarations, opening statements, meetings and interest, Congress has made little progress in passing a forward-looking telecommunications bill that reflects the current and future marketplace. Meanwhile, we have preserved the broken, outdated models and provisions of the Communications Act of 1934 as if the status quo provided stability, certainty or comfort. It provides none of this. 

For several months, I have been working to develop a legislative framework to deal with Internet-protocol (IP) communications. This process has been helpful in exploring the benefits and opportunity created by IP technologies but has also served to highlight inherent weaknesses of current telecommunications law.

Across America, classrooms from middle schools to universities are filled with students using technologies that highlight the futility of trying to regulate or manipulate the offering of new communications services or applications. The imagination and functionality demanded by these dynamic consumers are driving communications away from central control by government at all levels and reinventing the vision of communications providers. While many providers, including wireless and emerging Web-based industries, are quick to adjust to changing circumstances, our laws have not done the same.

A careful reading of current law provides ample evidence that the time has passed for casual reform or bureaucratic finesse. Instead, we need bold restructuring that recognizes the seismic shift in our communications habits and the infrastructure that is developing in the face of regulatory roadblocks and past inaction. I propose that we consider repealing two pillars of the Communications Act: Title 2 and Title 6.

In the face of changing technology, the interplay between Title 2 and Title 6 has created inconsistencies. For example, a video packet delivered over an IP network can subject a provider to PEG obligations, or local franchise fees; a data packet delivered over the same path using the same network carries no such requirement.

In a non-IP world, cable is regulated at the federal and local level, while telephone companies are regulated at the federal and state level. Is a cable system so unique that its existence justifies thousands of individual franchise regulations? For that matter, what justifies 50 independent state regulators for a national and international telephony system? This is not rational and not sustainable and hinders long-term capital investment and economic growth.

More important, Titles 2 and 6 contain requirements that are wholly irrelevant in today’s marketplace. The comforts that some providers perceive from Title 2 requirements do not face market realities. Common-carrier requirements and rate-of-return regulation are yesterday’s mechanisms to deal with a monopoly market.

If Internet companies can negotiate successfully to reach peering arrangements for the exchange of traffic, why must we maintain an intercarrier compensation scheme that allows regulators to set rates that far exceed market prices? Should the FCC or state need to bless every line extension by an incumbent telephone company? If there are five, 10 or more providers of voice products, do we still need to ensure that rates are “just and reasonable”? 

Title 6 is equally problematic. Local franchise restrictions are an anachronism in today’s world of national video providers. Why should a cable operator be forced to offer multiple PEG channels when a satellite provider competing in the same market for the same viewers does not? Do we need to set statutorily the channel placements of video providers? Should the sale of a cable operator be subject to the franchise-manipulation process when the same municipality has no such power over the sale of a manufacturing facility in its territory? The requirements of this title are just as puzzling when applied to a broadband communications provider that uses a portion of its capacity to offer video programming over its network. 

In the coming months, several reform proposals will be put forward for Congress’s consideration. Let’s hope that these efforts do not contain pages upon pages of new legislative text preserving portions of current law under the guise of deregulation.

Unfortunately, when faced with the challenge of reform, members are often motivated by fear — fear of political implications, interest groups or technological uncertainty. Thus, the instinct to fall back on a comfortable framework — even one that is outdated and inappropriate — is powerful indeed.

I offer a simple solution for the faint-hearted: Go talk to an eighth-grader (any eighth-grader). They will reassure you clearly and unequivocally that these rules make no sense. Go ahead and get rid of them. … It will be all right.

Sununu is a member of the Commerce, Science and Transportation Committee.