Is it Time for New Telecom Law?

Capitol_domeA number of articles published since the recent election claim that both the House and Senate are ready to tackle telecom reform. There have been subcommittee meetings and discussions in both chambers about the topic for several years, but the idea hasn’t gone much yet past talking about it.

We certainly need telecom reform. After all, the Telecommunications Act of 1996 was passed in a very different time. That’s the year where AOL was still the largest ISP in the US and the year they introduced new modems that doubled dial-up speeds from 28 kbps to 56 kbps. 1996 was also the year that kicked off a decade of major investment by cable companies in HFC networks. There were 10 million cable modem customers by 2002, but in 1996 there were almost none. And DSL was just hitting the market in 1996 and didn’t get serious traction until a few years later.

Probably the biggest fault with the 1996 Act is that it treated telcos and cable companies very differently. The Act imposed significant unbundling requirements on the telcos while leaving the cable companies largely untouched. Perplexingly, this was done at a time when everybody in the industry knew that cable companies and HFC networks would soon become major players in both the telephone and high-speed data markets. In 1996 engineers and technologists understood that cable modems were going to soon be faster than DSL due to inherent advantages of coaxial cable over telephone cable. At the time everybody I knew just assumed that the cable company had good lobbyists.

But the Act did impose new rules on cable companies concerning programming. And it is clear that those rules are now growing quickly obsolete with the migration of video to the web. A revised Act certainly needs to address OTT video and the entire gamut of on-line video issues.

In essence the Act of 1996 created a whole lot of rules in silos – separate rules for the cable and telco industries. In doing so the Act almost completely ignored the burgeoning cellular industry. Now that people use every data on every kind of network it’s time for rules that are updated to recognize the new reality.

One of the stickiest points of implementing a new telecom law is going to be net neutrality. If the FCC does not soon put this issue to bed, then net neutrality will be one of the biggest issues of a re-written Telecom Act. Both chambers of Congress have set a goal to have a new Act enacted by the end of 2016. That means that the Republic lawmakers are still going to need the agreement from a Democratic president to get it signed, and that means the two sides have got to somehow come together on net neutrality.

Some of the problems we have today with net neutrality come directly from the 1996 Act. In that Act the Congress very clearly decided to not impose Title II regulations on the budding high-speed cable modem market. They decided to let cable companies and telcos undertake a different path, with the telco path much more regulated than the cable path. We ended up with a decade that required DSL unbundling and DSL resale, but with no attempts to make cable modems open to competition.

There are some parts of the 1996 Act that have been very effective and I hope they remain intact. For example, the Act set forth the concept that any company with the technical knowledge and financial wherewithal ought to be allowed to compete in the telco market. That has given rise to thousands of CLECs and there are numerous markets with vigorous telephone competition. One can hope that a new Act will make it clear that there ought to be competition in every telecom market, and with a lot more products than just telephone.

One can also hope that a new Act will get rid of the silos. It is time to stop having different rules for different parts of the industry. For example, the distinction between traditional voice services and VoIP needs to be eliminated, since in practical terms customers can’t tell the difference. There should not be different rules concerning the provision of cable TV service by different types of providers.

Certainly one of the biggest challenges Congress will face is what to do with the web and video. Hopefully a new Act is forward looking. There is convergence everywhere in the industry and people want to partake of telecom services from any platform using a plethora of devices. The Congress needs to make it as okay to watch a movie on your cellphone as it is to watch it on your TV. The next Act needs to look at programmers as hard as it looks at service providers.

Rewriting the telecom Act is a massive undertaking because every lobbyist from the telecom industry is going to have ideas that they think must be included. And there will be plenty of naysayers and voices from outside the industry arguing on the side of the public. The problem is that there is no one right answer. I think if you sent twenty panels of industry experts off to list what should be in a new Act that you’d get twenty different answers.

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