Internet Prospers With "Hands-Off Unregulation;" FCC Paper Rejects Need for Precipitous Action

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OPP Working Paper No. 31: Text | Word97 | Acrobat

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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

FOR IMMEDIATE RELEASE
July 19, 1999
News Media contacts:
Linda Paris at (202) 418-7121
Rosemary Kimball (202) 418-0500

INTERNET PROSPERS WITH "HANDS-OFF UNREGULATION;"
FCC PAPER REJECTS NEED FOR PRECIPITOUS ACTION

The FCC Office of Plans and Policy (OPP) today released the latest in its OPP Working Paper Series, entitled "The FCC and the Unregulation of the Internet." Authored by Jason Oxman, Counsel for Advanced Communications in the Office of Plans and Policy, the paper examines the FCC's thirty-year history of not regulating the data services market, and how that tradition of "unregulation" was a crucial factor in the successful growth of the Internet. OPP periodically issues working papers on emerging issues in communications; these papers represent the individual views of their authors and are not official statements by the FCC or any FCC commissioner.
Since opening an inquiry into the interrelationship of the telecommunications network and computer-based services in 1966, the FCC has taken numerous affirmative steps to ensure that the marketplace, not regulation, allowed innovation and experimentation to flourish. As a result, a vast majority of Americans have inexpensive and reliable access to the Internet.
The typical American family gains an incredible amount of value from its $20 per month Internet account, including such services as investing, travel planning, homework research, email communications, and shopping, among others. The Internet Economy generated over $300 billion in revenue in the U.S. last year and is rapidly changing the way America does business. Nearly one third of the nation's households are regular Internet users.
A summary of the working paper is attached. The full text is available on the FCC web site at www.fcc.gov.

- FCC -
Office of Plans and Policy contact: Jason Oxman, 202-418-1078, joxman@fcc.gov

July 19, 1999

Summary of
"The FCC and the Unregulation of the Internet"
by Jason Oxman, Counsel for Advanced Communications
Office of Plans and Policy
Working Paper No. 31

The success of the Internet has not been an accidental development. Market forces have driven the Internet's growth, and the FCC has had a role to play in creating a deregulatory environment in which the Internet could flourish. The working paper examines the history of the FCC's data policies and the ways in which those policies have benefited the Internet. Key FCC policy decisions, the paper finds, have included:

Fostering the development of an interconnected telecommunications network that ensured near universal availability of a reliable and affordable telephone system over which data services could be offered.
Determining through the Computer Inquiry proceedings that computer applications offered over that network were not subject to regulation, giving rise to the unregulated growth of the Internet.
Exempting enhanced service providers from the access charges paid by interexchange carriers, helping drive the availability of inexpensive dial-up Internet access.
Deregulating the telecommunications equipment market while requiring carriers to allow users to connect their own terminal equipment, helping to foster the widespread deployment of the modem and other data equipment tools that can be easily attached to the public switched network.
Implementing flexible spectrum licensing policies that permit innovative uses of wireless data services, leading to the development of wireless Internet applications.

In the paper, Jason Oxman also concludes that the FCC, in plotting a deregulatory course for the future, should take advantage of lessons learned in three decades of "unregulation" of data networks:

Do not automatically impose legacy regulations on new technologies,
- When Internet-based services replace traditional legacy services, begin to deregulate the old instead of regulate the new; and
- Maintain a watchful eye to ensure that anticompetitive behavior, such as bottlenecks and tying, do not develop, and be careful that any regulatory responses are the minimum necessary and outweigh the costs of regulation.